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    Exxon plans big spend on low-carbon opportunities

Summary

Q3 earnings for the US major surged $7.4bn compared to the same period last year.

by: Daniel Graeber

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Exxon plans big spend on low-carbon opportunities

US major ExxonMobil said October 29 that it anticipated the rollout of “financially accretive” projects in its low-carbon business segments.

Exxon in its earnings report for the third quarter said it anticipated annual capital investments of between $20bn and $25bn and a “4X increase in low-carbon spend.”

Exxon has faced pressure from activist investor Engine No 1, which has questioned corporate spends on such things as LNG projects in Mozambique and other fossil fuel endeavours. Engine No 1 has also managed to install several of its nominees on the US major's board.

To further its low-carbon aspirations, the company this month said it had initiated plans to expand carbon capture and storage (CCS) capabilities at its CO2-rich LaBarge natural gas field in Wyoming by about 1mn mt/yr of CO2. It requested bids for engineering, procurement and construction for the expansion, which represents an investment estimated at $400mn.

LaBarge is the centrepiece of Exxon’s global CCS activities. Exxon CEO Darren Woods suggested in the quarterly release that was just a hint of things to come.

"Next month, the board will finalise our corporate plan that supports investment in industry-advantaged, high-return projects, and a growing list of strategic and financially accretive lower-carbon business opportunities," he said. “We expect to increase the level of spend in lower-emission energy solutions by four times over the prior plan, adding projects with strong returns as well as seeding some development investment in large hub projects that require further policy support.”

Exxon joined the growing list of big energy companies in reporting healthy earnings during the third quarter. Exxon said its quarterly earnings increased by $7.4bn relative to the same period in 2020 and expected to start a share repurchase program of up to $10bn starting in 2022.

The company’s realised average price for crude oil increased 7% from Q2 levels and natural gas realisations were 28% higher than the prior quarter.

Total liquid volumes increased 5% from Q2, driven in part by lower maintenance activity. In the US, Exxon said its production from the Permian shale basin was up 30% from Q2 2020.

"The focus remains on continuing to grow free cash flow by lowering overall development costs and increasing recovery through efficiency gains and technology applications,” the company said.