ExxonMobil touts strong second quarter

Aug. 5—ExxonMobil's recent merger with Pioneer Natural Resources has already proved advantageous with the infusion of talent and expertise that the $60-billion transaction brought.

That's according to ExxonMobil Executive Chair-CEO Darren W. Woods, who said Pioneer has contributed a strong entrepreneurial mindset and a deep expertise in fracking resource development.

Woods said during his company's second quarter earnings call report that it had delivered earnings of $9.2 billion for its second-best second quarter results in the past 10 years.

"Overall market conditions were soft in the second quarter while prices remained firm," Woods said from Houston. "We expect to generate between $80 billion and $140 billion in cumulative surplus cash from 2024 to 2027 and the Pioneer acquisition increases that even further.

"Including Pioneer our Permian Basin production surged to 1.2 million barrels per day."

Woods said ExxonMobil's strong performance continued to support its capital allocation priorities including the distribution of $9.5 billion to shareholders, of which $4.3 billion was in dividends.

"With the close of the Pioneer transaction our shareholders now include the former owners of Pioneer stock, who've begun to benefit from the strength of our combined companies," he said. "We welcome them to ExxonMobil just as we do the talented people of Pioneer, who bring a strong entrepreneurial mindset and deep expertise in unconventional resource development.

"The average time to complete this type of merger over the last several years has been more than 11 months. We closed Pioneer in six, once again demonstrating the strength of our organization in effectively executing large, complicated projects including large acquisitions.

"It is challenging work, requiring deep thinking, a highly structured approach and disciplined action, areas where we excel. Although it's still early days the integration is exceeding our expectations and I'm confident we'll deliver even more synergies than we've announced."

Woods said global energy demand will probably be about 15 percent higher in 2050 than it is today.

"We see oil demand holding steady at around 100 million barrels per day in 2050 while demand for renewables and natural gas grows considerably," he said. "An energy-abundant future driven by economic growth and rising levels of prosperity creates opportunity for ExxonMobil no matter the speed or direction of the energy transition.

"Over time it becomes more and more obvious that heavy industry commercial transportation will not be meaningfully powered by renewables. The world will come to rely more on technologies where we have an advantage including hydrogen, biofuels and carbon capture and storage."

Woods said a serious approach to the transition should focus on moving the world from high-carbon to low-carbon energy, not simply from oil and gas to wind and solar.

"The data, science and economics all support this as fundamentally necessary and our strategy reflects this reality," he said. "We began as a maker of kerosene for lamps. Today no one thinks of ExxonMobil as a kerosene company serving the lamp industry.

"In the future we will be defined by the technologies and products that we are producing to meet the world's future needs, as always, by drawing on our unique combination of competitive advantages."

Woods said his company also sees a sizable opportunity in carbon materials transforming the molecular structure of low-value, carbon-rich feeds from its refining processes in the high-value products for a range of applications.

"We're targeting market segments with margins of several thousand dollars per ton and growth rates outpacing GDP," he said. "These include carbon fiber, polymer additives and battery materials.

"Our competitive advantages of scale, technology and integration, combined with our North American manufacturing footprint, provide a foundation for building these compelling new margin businesses."

Senior Vice President-Chief Financial Officer Kathryn A. Mikells said her company continued to optimize maintenance as a big driver of overall savings.

"We gave a number of $200 million in energy products in terms of my prepared remarks," Mikells said. "And that was just noting that, in the half, we had a particularly heavy turnaround slate.

"If we looked back at that same turnaround slate the last time we did it, we did it much more quickly and we did it at lower cost. Hence the $200 million savings number. We're also obviously driving savings in terms of supply chain and looking to get more efficient there.

"Our centralized organizations are responsible for driving savings into the business."