Exxon Mobil eyeing competitors while prices are low

Exxon Mobil on track to start up 10 new upstream projects in 2016/17, adding 450,000 b/d of production capacity

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Exxon Mobil CEO Rex Tillerson

Exxon Mobil is interested in acquisitions while oil prices are low, but CEO Rex Tillerson told the annual meeting with investors in New York that sellers have unrealistic price expectations.

Tillerson said Wednesday that Exxon Mobil Corp. is in financial position to pursue acquisitions or change its spending plans depending on what happens to the oil market.

Earlier this week Exxon Mobil raised $12 billion from a bond sale, increasing speculation that it could seek to scoop up competitors.

Tillerson says some companies have lost value because of heavy borrowing but haven’t adjusted the value they put on their companies, making acquisitions harder.

Tillerson also says oil prices could still fall because of overproduction.

“We remain steadfast in our mission to create superior long-term shareholder value,” Tillerson said.

“We have the financial flexibility to pursue attractive opportunities and can adjust our investment program based on market demand fundamentals.”

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Exxon Mobil anticipates capital spending of $23 billion in 2016, down 25 per cent from 2015. The company continues to selectively advance its investment portfolio, building upon attractive longer-term opportunities.

“We are focused on maximizing benefits across the energy value chain,” Tillerson said.

The company captures unique value from its diverse, high-quality resource base from exploration, development and production all the way through to the fuels, lubricants and petrochemical products used by consumers.

Exxon Mobil is on track to start up 10 new upstream projects in 2016 and 2017, adding 450,000 oil-equivalent barrels per day of working-interest production capacity. The company is enhancing resource value through production optimization, technology application and cost management.

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Exxon Mobil’s Beaumont, TX refinery.

Exxon Mobil’s downstream and chemical businesses have the scale and integration across refining, lubricants and chemicals to maximize product value while driving operating efficiency. Approximately 80 per cent of the company’s 5 million barrel-per-day refining capacity is integrated with chemical and lubricant manufacturing facilities.

“We are advancing several downstream and chemical projects to increase feedstock flexibility, produce higher-value products and expand logistics capabilities to strengthen our competitive advantage in these businesses,” Tillerson said.

During the meeting, ExxonMobil reviewed the following performance highlights.

  • Exxon Mobil has increased its dividend for 33-consecutive years through 2015, with an annual increase of 10 per cent per year over the past 10 years. On average, 48 cents of every dollar generated by the business during the last five years has been distributed to shareholders.
  • Return on average capital employed of 7.9 per cent in 2015 was nearly 4 percentage points higher than the company’s nearest competitor. During the past five years, return on capital employed averaged 18 per cent, about 5 percentage points above its nearest competitor.
  • Exxon Mobil generated $33 billion of cash flow from operations and asset sales and $6.5 billion of free cash flow in 2015.
  • Since 2012, Exxon Mobil has started up 22 major Upstream projects, adding more than 940,000 oil-equivalent barrels per day of working interest production capacity. Six of these project start-ups occurred in 2015.
  • The corporation achieved a total net reduction of $12 billion in both capital and cash operating costs in 2015. Upstream total unit costs are down 9 percent from 2014. Refining unit cash costs are 15 percent lower than the industry average.