Q1 2025 Exxon Mobil Corp Earnings Call
Speaker Change: Good morning everyone. Welcome to Exxon Mobil's first quarter, 2025 earnings call.
Today's call is being recorded. We appreciate your joining us today. I'm Jim Chapman, Vice President, Treasurer and Investor Relations, and I'm joined by Darren Woods, Chairman and Chief Executive Officer, and Kathy Michaels, Senior Vice President and Chief Financial Officer. [inaudible]
Speaker Change: This Court's presentation and prerecorded remarks are available on the Investors section of our website.
Speaker Change: They're meant to accompany the first quarter earnings news release, which is posted in the same location. We also published a new company overview presentation, which is posted alongside our earnings materials.
Speaker Change: You can find more information on the risks and uncertainties that apply to any forward-looking statements in our SEC filings on our website. Note that we also provided supplemental information at the end of our earnings slides, which are also posted on the website.
Speaker Change: And now, I'll turn it over to Darren for opening remarks.
Good morning and thanks for joining us.
Speaker Change: I'll begin with some comments on the current market and policy environment, especially in light of the ongoing uncertainty in tariffs.
Speaker Change: There's a clear that this uncertainty is weighing an economic forecast, causing significant volatility in raising the prospects of slower growth, coupled with the threats of increased OPEX supply, we're seeing significant downward pressure on prices and margins.
Speaker Change: In this environment, it's more important than ever to focus on what we can control in this company's track record of delivery.
Speaker Change: The work we've done over the past eight years should make one thing clear. We're ready for this.
Speaker Change: Our strategy has led to an advantage portfolio with low cost of supply .
Speaker Change: A strong balance sheet with a 7% net debt to capital ratio that leads large cap industrials in all IOCs.
Speaker Change: In a lean cost base, we've taken $12.7 billion of structural cost out of the business since 2019.
Speaker Change: Think about that. Almost two and a half billion dollars a year for the past five years. No other IOC even comes close.
Speaker Change: Our organization has planned for this. We pressure test our plans and the financial outcomes with scenarios that are more severe than our COVID experience. For us, success isn't defined in the good times, but in the hard times.
Speaker Change: That's also where our competitive advantages and people, scale, technology, integration and execution excellence really stand out.
Speaker Change: Today, we're prepared in better position than others to respond to market challenges, and in fact, take advantage of the opportunities they present. Looking past this, the longer-term fundamentals underpinning our businesses are robust. [inaudible]
Speaker Change: The world will continue to need reliable and affordable energy and our portfolio of products to support modern living [inaudible]
Speaker Change: We'll continue to invest in advanced projects for both our existing and new businesses to profitably meet these needs. When we get to 2030, I'm confident we will have delivered on our plan, $20 billion more in earnings and $30 billion more in cash, assuming constant prices and margins. [inaudible]
and significantly greater value for shareholders. [inaudible]
Speaker Change: Turning to our current performance, we delivered another strong quarter thanks to the hard work of our people executing our strategy.
Speaker Change: Our earnings were $7.7 billion, up 4% sequentially, excluding identified items.
Speaker Change: We generated $13 billion of cash flow from operations, which led all IOCs. As I noted, to improve efficiency, we continue to take expense of the business with an industry leading program of structural cost savings.
Speaker Change: To further migrate our portfolio, we sold $1.8 billion of assets in the quarter, driven by investments in the upstream.
Speaker Change: We've also completed the $5 billion in criminal investments. We laid out at the corporate plan update in December .
Speaker Change: Since 2019, we've sold $24 billion of non-core assets, strategically reshaping our portfolio and growing earnings power.
Speaker Change: Taken together the strategic choices and investments we've made since 2019 have strengthened our quarterly earnings power by $4 billion at current prices and margins.
Speaker Change: Our ongoing transformation to become a more efficient company, the lower cost of supply, is driving lower break evens, with firm plans to improve them to $35 per barrel by 2027, and $30 per barrel by 2030.
Speaker Change: Prudently investing in advantaged opportunities across price cycles was key to doubling earnings since 2019 and is critically important to growing cash flow $30 billion by 2030.
Speaker Change: Our ability to successfully deliver large-scale, attractive investments at or below cost, and often ahead of schedule, positions us well in difficult market conditions.
Speaker Change: This is one of the largest, most complex projects we've ever done, and we delivered it ahead of schedule and under budget. We will competitively supply high-value chemical products for the China market, protected from tariffs with attractive long-term growth.
Speaker Change: We're starting up our second advanced recycling unit at Baytown using proprietary technology to recycle plastic waste at a much lower cost than alternative processes.
Speaker Change: Like our first advanced recycling unit, the new one will have capacity process 80 million pounds a year for a growing market of certified circular polymers
Speaker Change: We're bringing on two new FPSOs or a deepwater projects offshore Guyana in Brazil. We expect to start up both later this year.
Speaker Change: and in our new technology and able businesses, Market Interest continues to grow.
Speaker Change: With our proxima business, we've showcased a new high-strength EV battery case at the world's leading composite trade show in March [inaudible]
Speaker Change: Our solution improves the efficiency of the vehicle manufacturing process, reduces the overall weight and can't be replicated by other composites [inaudible]
Speaker Change: We'll hit multiple proximal milestones this year, including more than doubling our production capacity.
Speaker Change: Altogether, the 10 Advantage projects we're starting up this year are expected to generate more than $3 billion of earnings in 2026 at constant prices and margins.
Speaker Change: Our capital allocation priorities remain unchanged. Invest in profitable growth, maintain financial strength, and share our success with shareholders. To generate scrolling cash flows, years into the future, we must invest today. Thank you very much.
Speaker Change: It's hard to consistently grow free cash flow in a capital intensive business over the long term. We're doing it.
Speaker Change: Reducing attractive investments to increase near-term free cash flow weekends, the business of the long-term [inaudible]
Speaker Change: Compromising the future is a high price to pay for pleasing a few short-term investors. Our cash low grows consistently throughout our plan horizon of 2030. And while our total cash capex grows to between 28 and $33 billion per year through 2030.
Speaker Change: Our reinvestment rate declines from 50% to 40% of cash flow over the planned period.
Speaker Change: We're putting Gabel to its highest and best use to further strengthen the earnings power of the company.
Speaker Change: In the upstream, we're focused on growing volumes of our most profitable barrels. We're on track for more than 60% of our production to come from advantage assets by 2030. With an increase in per barrel profit from $10 a barrel last year to $13 a barrel in 2030. [inaudible]
Speaker Change: In product solutions, advanced projects are accelerating our shift to more profitable mix of products.
Speaker Change: We're on track for 80% growth of high value products by 2030, which will bring them to more than 40% of total product solutions earnings
Speaker Change: In low-carbon solutions, we expect to generate $1 billion of earnings by 2030 in businesses that are insulated from commodity price cycles. We know that shorter-term investors want lower capex and higher cash distributions.
Speaker Change: I suspect with today's level of market uncertainty, the call for this will be even stronger
Speaker Change: That's short-sighted. We play the long game. We are rewarding shareholders today with investments made in the past when we face similar circumstances and a lot of criticism for staying in the course.
Speaker Change: The passage of time demonstrated the value in this approach. We know that the damaged investments we're making today are critical in growing shareholder returns and distributions in the future.
Speaker Change: Having said this, we are focused on value. If changes in market conditions present opportunities to improve the NPV of our investments, by pivoting or inventorying opportunities, we'll take them.
Speaker Change: Today, more than the third of our upstream production comes from full cycle assets, where activity and span can be quickly adjusted in response to market conditions.
Speaker Change: As we discussed in detail of the corporate plan update and our newer businesses and for projects that have not yet reached FID if the necessary policy support or market developments are not sustained or do not materialize will defer investments.
Speaker Change: Our focus on the fundamentals, our strategy, and the resulting investments in the strength of our advantages are growing earnings and generating cash, allowing us to create leading value for shareholders.
Speaker Change: In the quarter, we distributed $9.1 billion of cash, more than any other IOC.
This included $4.8 billion of shared buybacks. [inaudible]
Speaker Change: We've now repurchased roughly a third of the shares we issued to complete our transformational pioneer acquisition, which closed a year ago tomorrow.
Speaker Change: As of the quarter end, we delivered a three year total shareholder return of 60% for a compound annual growth rate of 17%.
It's well above any other IOC.
Speaker Change: It's also well above the broader set of large cap industrial companies, with the average TSR compound annual growth rate of 14%. We also outpaced large cap industrials as a cash engine.
Speaker Change: Over the past three years, our total free cash flow equaled over 25% of our current market cap. There's average less than 10%. The strong value we've created for shareholders has not gone unnoticed. [inaudible]
Speaker Change: We're receiving positive feedback in our engagements with investors, which we've ramped up significantly over the past five years.
Speaker Change: Leah this month is our annual meeting. Since our last 20 years ago, leaders from the company including members of our board of directors have met with roughly 75% of our institutional investors.
Speaker Change: This year, for the first time since 1958, we have zero shareholder proposals in our proxy. We believe this is a result of two things.
for Financial and Operating Results. [inaudible]
which exceed all integrated oil companies are almost any measure. [inaudible]
and our willingness to challenge actions. [inaudible]
that undermined the value of our company. [inaudible]
Speaker Change: and abuse legitimate processes. Last year we took legal action against activists seeking to shrink our business.
Speaker Change: by repeatedly submitting show and proposals that in their own words were Trojan horses for their activist agenda. This is in direct contrast to our efforts to expand engagements with investors who want to hear more about how we're growing the value of our company. Thank you very much.
Speaker Change: Our lawsuit against the European Union when it implemented an unjustified profit tax.
Speaker Change: in the California Attorney General when he falsely accused us of misrepresenting the benefits of advanced plastic recycling, or two other examples of fighting to retain the value we're generating for our shareholders
Speaker Change: That's our focus in our commitment to grow and protect shareholder value. With that, we'd be happy to take your questions.
Thank you, Darren.
Speaker Change: Before we move to Q&A, I want to highlight that we've published our 2025 Advancing Climate Solutions Report this week.
Speaker Change: Detailing all of our progress on solving the end equation, meeting demand and reducing emissions.
as well as our latest sustainability report.
Speaker Change: And just as a reminder, we mentioned in our prepared remarks that we published a new company overview presentation.
Speaker Change: All of these documents are linked on this page and can be found on the investor relations portion of our website.
We encourage you to take a look.
Speaker Change: With that, let's move to Q&A. Operator will ask you to please open the line for our first question.
Speaker Change: Thank you. The question and answer session will be conducted electronically. If you'd like to ask a question, please do so by pressing the star key followed by the digit one on your telephone.
The first question comes from Betty J. of Barclays.
Betty Jang: Good morning, thank you for taking my question. I have to say we're hearing this loud and clear about the resilience of the portfolio. We're fully cognizant that for Exxon any response is a function of choice and you are playing the long game.
Speaker Change: But earlier you also talked about the flexibility in the portfolio and that you will reconsider plans if you can improve MPV of investment. So I just want to better understand and there won't market condition, what weren't exercising that flexibility.
Speaker Change: and then how would you balance that decision versus the operational momentum you're seeing across the businesses?
Speaker Change: Yeah, good morning, Betty, and thank you for the question. I think you've touched on.
Speaker Change: and really critical elements of where we stand and how we're thinking about the business. The first point is we don't have to do anything in this environment. It's all an option of choice. And then making decisions with the flexibility we have to maximize NPV as a function of where does the market go today? Okay.
Speaker Change: We've also got a factory in where you know Costco, where the cost is supplies, what contractors are doing, so there's a number of variables that go into this, our unconventional business in particular.
Speaker Change: is paying attention to all those things. We've got a very rigorous process for evaluating the trade-offs and coming up with what we think is an optimum.
Speaker Change: Investment rate and approach going forward, which, you know, fundamental is going to be driven by where the, how, how low the market goes and I think there are opportunities.
Speaker Change: in a low price environment that I'm going to make sure we're prepared to take advantage of. So it's not a black and white answer unfortunately for you, but I would just tell you you should have a lot of confidence that we understand the variables. [inaudible]
Speaker Change: are paying very close attention to them and assessing what's the best way to maximize the value of the company.
Now makes sense, full confidence ahead, thank you.
Thank you, Betty.
The next question is from Devin McDermott of Morgan Stanley . . .
Hey, good morning. Thanks for taking my question.
Speaker Change: So I wanted to spend a little bit of time on chemicals. So the China chemicals project is you highlight it gives you a large domestic supply source at a time when we're seeing rising trade barriers where you know watching one of the key strategic benefits of this project I think play out in real time. So I was wondering if you could talk a little bit more about how recent market developments like slow and global growth, US China tariffs or impacting performance at that facility and also your chemicals business more broadly.
Speaker Change: Sure, so I think maybe to start with the big picture and then zoom into the specifics of our China complex
Speaker Change: I think we've been, the industry has been in essentially a long position from a supply standpoint for quite some time and the margins that we're seeing, industry margins that we're seeing across
Speaker Change: The world are well below what our past experience in history has been, and that's really a function of...
Speaker Change: really good demand, strong demand, but even more supply and stronger growth and supply, which is creating this
Speaker Change: Market Glutton, so that's been the challenge I think we've been facing in the industry, everyone in the industry has been facing quite some time.
Speaker Change: We, with the work that we've been doing and the focus on one advantage projects, cutting the cost out of our business and growing high value products are continued to deliver very sound results in this very challenging market. So our expectation that's going to be with us for quite some time.
Speaker Change: The world will continue to grow. We'll eventually with time grow out of the excess supply condition. I'm sure there'll be some plants that...
Speaker Change: High Value and Use, and therefore justify a premium in the marketplace, running very reliably, running at a low cost, and being competitive in what's the challenge you market. As we've said, and Betty just alluded to, we've been building our business for this, and so we feel very comfortable for a rad. [inaudible]
Speaker Change: External perturbations and being having a strong presence in an important market.
Speaker Change: underpinned a lot of the thinking behind that investment. It is a very large investment, a complex one. I'm very pleased to say that we built that facility.
Speaker Change: Well below the incremental cost of supply coming on that you'd see anywhere else in the world. We have indeed, what I would say, the Chinese markers for low-cost capital investment. We did it at a very...
Speaker Change: Fast on a very fast schedule, and that team has started that facility up very, very smoothly and got on to on-spec production faster than any other startup we've had. So it's just been I think a testament to the capability of our people, our entire organization that have come together.
Speaker Change: for the most of this year it'll be in start up and going through grade wheels and making sure that we're really... [inaudible]
Speaker Change: Breaking that facility in, then our expectation is 2026, we'll be up running and blowing and going with facilities so feel good about where we're at and the potential that we've got there.
Great. Well, great to see the customers, all thanks, Darren.
Thank you, Darren [inaudible]
The next question is from Doug Leggett of Wolf Research.
It's interesting to watch everyone talk about sheer bye-bikes [inaudible]
Speaker Change: and you guys, you know, in terms of what the flexibility might be and so on, you guys have reiterated your $20 billion pace.
Speaker Change: One day before the anniversary of when you close pioneers, my question is this.
Speaker Change: There's a lot of benefits to Exxon Mobil for buying in the stock.
Speaker Change: beyond just the cash return aspect, specifically reducing the dividend burden on the equity you issued on pioneers. My question is simply
Speaker Change: Given the volatility in the market, would you continue this pace regardless of the commodity within reason and leaving your balance sheet to ensure that those pioneer shares were essentially bought back in? [inaudible]
Yeah, good morning, Doug. I think, you know, you've touched on...
Certainly one of the objectives that we had, when we...
Speaker Change: acquired Pioneer. We recognize that the valuation, the differential valuation in our stocks.
Speaker Change: presented an opportunity to do a stock transaction, but at the same time recognize that issuing more stock put an additional burden on us, an additional obligation, and we were very focused on making sure that we managed that obligation. [inaudible]
Speaker Change: and brought that obligation back down again. And that's, you know, part of the thing that's underpinned, they're the increase in the buybacks and the pace that we're keeping. And so that's very much in mind.
Speaker Change: We're very focused on continuing to do that and feel like this is a good time to continue doing it frankly you know our stock price
Speaker Change: is heavily correlated with crude and crude price. I don't believe that truly reflects the value of the company. And so as it moves down with...
Speaker Change: Group prices in my mind, that's a great buying opportunity for the stock, and so...
Speaker Change: We're committed to continuing to do that and I think the market conditions we're in today are reasonable. We'll obviously keep an eye on that going forward. Our priority continues through any making sure that we can invest in the advantage projects.
Speaker Change: that frankly are going to lay the foundation for all the growth that we see coming through 2030 and beyond.
Speaker Change: maintaining a strong balance sheet to give us the foundation we need to take advantage of any opportunities that might come in a challenge market is really important but then obviously addressing the obligation to dividend and sharing our success with our shareholders is pretty critical. [inaudible]
Michael Rizzo,てー melt-offrewover-mobile-cash
Speaker Change: Thank you. I wonder if I could squeeze a quick follow-up, Darren, but just very quickly on the 10 projects you have this year, one specifically. What is the current status or expected timing of the start-up of Golden Pass? And I'll leave it there. Thank you.
Yeah, they are that project along with the others that I [inaudible]
Great. Thank you so much.
You bet. Thank you.
The next question is from Neil Mehta of Goldman Sachs
I'm
Neil Mehta: Yeah, good morning, Darren. You mentioned in your comments you want to make sure that you have take advantage of opportunities that a low-cost environment.
Neil Mehta: can present and certainly talk about how you're doing that from a cost perspective. Thank you.
Neil Mehta: You know, you can just give us your latest thoughts on whether there are any gaps in the portfolio or how you're thinking about
Continuing to consolidate given the strength of the balance sheet. [inaudible]
Speaker Change: Sure, thank you and good morning, Neil. I would just say maybe stepping back fundamentally how we think about acquisitions.
Speaker Change: is this the equation that we've talked about in the past of one plus one has to equal three and that three comes from taking all the advantages that we've been very focused on strengthening over the last eight years and I think
Speaker Change: or certainly demonstrating to the pioneer acquisition the real value of those advantages.
Speaker Change: along with the other projects that we're delivering that we take those advantages and look for opportunities where we can apply those to other companies, other assets so that we can grow the value of that beyond.
Speaker Change: What either of us could do independent one another and so that that fundamental approach to thinking about acquisitions and leveraging our advantages and core capabilities keeps us on the lookout constantly for where we can find those opportunities when we get into a low price environment.
where potentially some companies don't have the same. [inaudible]
Speaker Change: Foundations that we do, the same strengths, the same capability to write out some of the low points of the cycle. That could present opportunities. We want to be responsive to those opportunities. So I wouldn't tell you that the emphasis or the focus changes in the low price environment, but we're cognizant that there may be more opportunities in materialize. We don't we're not counting on them. We certainly don't need them. And the base portfolio that we've got and the growth profile that we've laid out. But we want to make sure that we're taking [inaudible]
Speaker Change: and any advantage of any of the opportunities that we see out there? [inaudible]
Very clear. Thanks, Darren.
Thank you, Neil.
The next question is from Stephen Richardson of Evochore ISI.
Stephen Richardson: Hey, good morning. Uh, Jared, I was wondering, um, you've been really consistent on, uh, policy frameworks and incentives and what you all need to see to make some investments certainly in, in, in some of the low carbon areas. So I was wondering if you give us an update on, on your current thoughts on Baytown, um,
Stephen Richardson: You know, are you likely to move ahead based on what you see today and if not what what else needs to happen for you to get to FID?
Sure, I thank you, Stephen. Good morning.
Stephen Richardson: So you're right, we've been, we entered into that business with the recognition that
Stephen Richardson: Frankly, the world needs to find ways to reduce emissions. We think that's that objective is an important one.
of this new end-discreet frankly.
Stephen Richardson: We're pushing very hard, though, to make sure that society finds a way, governments find a way to introduce [inaudible]
Stephen Richardson: Market mechanisms to engage the forces of market to engage competition drive technology innovations. And so, while we're looking to invest and take advantage of some of the government's support and policy that's out there, we're also working very hard to try to drive more robust. And so, we're looking to invest and take advantage of some of the government's support and policy that's out there.
Stephen Richardson: Holistic Policy, establish a true framework for carbon accounting so that we can begin to really understand where these sources of emissions are and can then start to calculate true carbon intensities and the cost of carbon reduction. And so longer term, we need a better system.
to manage emissions across the globe.
Stephen Richardson: The Baytown Blue Hydrogen was an attempt to take advantage of the desire to drive into reductions fast in areas that we believe are fundamental to long-term.
Music
Stephen Richardson: of that investment, and we needed to develop a customer base that we're signing off-take agreements and committing to buy the products that we produce.
Stephen Richardson: I think we've got a good project in hand that we think is very competitive and that will drive very competitive.
Returns and certainly have a has a good place in our portfolio . . .
Stephen Richardson: I think the policy that's in place is, you know, there's certainly, there's some debate today with the Trump administration. Our expectation is, well, some of that policy may change, it will be done in a very thoughtful way and our expectation is the things that we need to drive.
Stephen Richardson: Low Carbon Hydrogen, will probably stay in place, but we have to see that manifested.
Stephen Richardson: and the third piece that we're working on is the sales commitments in the off-take agreements. I'd say right now, that's probably the...
Stephen Richardson: The long pole in the tent with respect to driving this and so when those two things come together and we're confident that we have what we need to generate the returns that's going to be required to justify the investments we'll move forward. Hopefully that's later this year, but as we've been saying all along, it's very much a function.
Stephen Richardson: of locking those things down so we're confident that we'll generate to return some of those investments.
Thanks so much.
You bet, thank you [inaudible]
The next question is from John Royall with J.P. Morgan .
John Royal: Hi, good morning. Thanks for taking my question. So my question is on a pioneer. You're hitting the one year anniversary of closing the transaction. I was just hoping for an update on how you're tracking and the various buckets of synergies today and particularly on the production side, the improved recoveries you've talked about. I know it was a little longer dated, but just any commentary on how those efforts are tracking.
Speaker Change: Yeah, sure. Thank you, John . Appreciate the question. Good morning.
I would tell you, a crossed...
Speaker Change: are frankly finding more value opportunities than we anticipated, so at the corporate plan update, I know that we upped the annual average synergies we expect to see over the first 10 years from 2 billion to 3 billion.
Speaker Change: RVU today is at numbers even bigger, and so we're making really good progress. I think everybody who's working in that, that
Speaker Change: Resource that business that we have, whether you're a heritage Exxon Mobil, whether you're a heritage pioneer, are really excited by the opportunity. It has been...
Speaker Change: Truly a best of both approach and the value that the people pioneer brought to this effort and the enthusiasm Exxon Mobil folks brought to this is just really paying off in spades so I don't think we have
Finished.
Speaker Change: I'm mining the value that we see in this combination. So I'm very optimistic. I think as we head to the back of the year you'll continue to see the improvements in the value manifest themselves and the data that comes out and my expectation is we'll continue to grow this energy values going forward and
Speaker Change: We expect to update with you that with you when we share our corporate plan update at the end of this year but basically full steam ahead. Everything's looking very very good and we're exceeding our own expectations. . . .
Thank you.
Thank you.
The next question is from Bheeraj Borkhataria with RBC.
Bheeraj Borkhataria: Hi, thanks for taking my question. I just wanted to go back to your CapEx plans. When you presented your plans in December , there was a sort of wedge of CapEx that was the policy dependent and things you would like to do provided the right.
Bheeraj Borkhataria: The environment was there, and would it be fair to assume, you know, in the near term at least given the amount of uncertainty we see that, that cap is get pushed to the right and I'm thinking of things like the Baytown Project given the uncertainty on the policy and the tires.
Bheeraj Borkhataria: and then the second question, just a specific one on Murray's Unbeak. [inaudible]
Bheeraj Borkhataria: Yeah, on the CAPEX, you're right that we did break it out to be clear on what was base spend that was needed to kind of continue to drive and manage the growth in our base business.
Bheeraj Borkhataria: in that forecast going forward, put in some capital spend based on successfully FID in those projects. Those had not been decisions made yet, but we made room for them in our base plan.
and then obviously things that were dependent upon. [inaudible]
Bheeraj Borkhataria: a clear line of sight to those buckets that were dependent upon achieving success.
Bheeraj Borkhataria: So, and I would say at this stage, all those buckets are basically on track.
Bheeraj Borkhataria: You know, the third quarter I suspect, and so I don't anticipate at this stage.
Speaker Change: Tarris were uncertainty delaying anything that we're doing with respect to that. As I mentioned earlier, the probably the biggest. [inaudible]
Speaker Change: Challenge on our Baytown Blue Hydrogen Project is signing up to customers and getting the off take, which we've got a good line of sight too. We've got some very solid discussions that we're having in there, so I hope to see that come through but...
Speaker Change: So right now, I wouldn't suggest that we're going to see a lot of capital slipping out of the plan horizon but new year to year you may see some movement but frankly right now from what we can tell we're on track with the longer term plans that we've laid out.
Speaker Change: You know, if you look at-
and Sara Kaufmann, thank you.
Speaker Change: Yeah, with respect to Mozambique, I won't get into any of the specifics of what we've been doing there other than to say, as a philosophy, we're absolutely convinced that
Speaker Change: With respect to developing large projects, large complicated projects, that we bring a huge advantage to those efforts, the strengths that we have in our global projects organization I think.
Speaker Change: Franklin is hard for any other company to replicate and we want to make sure that as we deploy that advantage that we've got the right size stake.
Speaker Change: and in our developments to justify the effort. And I'd say that's just a general philosophy that we're taking across our entire portfolio.
Okay, thank you [inaudible]
Good.
Speaker Change: The next question is from Jeanne Salisbury with Bank of America.
Jeanne Salisbury: Good morning. A bit of a follow-up to an earlier question, but at your investor day in December , you showcased the new coke propant that you believed could be a big contributor to raising EURs by 15%. Now with four more months of well data, is that propant still performing to that expectation, even exceeding the expectation?
Jeanne Salisbury: Yeah, good morning. Yeah, I would tell you we have been...
Jeanne Salisbury: Progressing the deployment of the low weight profit, setting up the supply chain and logistics systems to support that, I would tell you that today we're...
Jeanne Salisbury: of the wells that we've already deployed that technology to. So that's I think going forward going to continue to be a critical part of the portfolio and
Jeanne Salisbury: The improvements that we make over time as we gain experience through deployment and my expectations, we see something similar there but 15% that we talked about is still a very good number, good solid days [inaudible]
Great, thank you [inaudible]
You bet.
The next question is from all of Sarah Simon of City.
Alasair Syme: Hi, thanks for the opportunity. Darren, just because you mentioned in your prepared remarks, could be...
Jeanne Salisbury: The litigation against the European Union, I'm in full tax, I don't know if there was any fault back in 2022.
Speaker Change: Where does this process currently sit, and what do you think the Tom Renders on Resolution?
Alasair Syme: Good morning, Aleister. Thanks for the question. You know, I would just maybe put that in the category of a number of the lawsuits that we've been involved in over the years. The wheels of justice turn slow, so my expectation, and I don't have a good timeline.
Alasair Syme: for that, but my expectation is that'll be like a lot of these legal cases that will wind its way through the procedural legal process and we'll see where we get you on that but I don't have an update on that today.
Okay, thank you [inaudible]
You bet.
The next question is from Roger Read of Wells Fargo. Hello.
Yeah, good morning.
Alasair Syme: Good morning, Roger. It's coming back kind of your thanks one there. Some of your, well, the end of your opening comments about, you know, kind of, I believe it's 12 billion of cost savings achieved so far 18 billion.
Alasair Syme: Targeted by the end of the decade. When you previously kind of talked about the next stage of cost savings, it seems to have been logistics focused.
Alasair Syme: Nothing really said this time. So I'm just curious and updated. We think about the incremental six. Is that logistics in procurement? Or has that grown as well, you know, are expanded in terms of the scope of danger looking to cut costs on?
Alasair Syme: Sure, I'll hand it over to Kathy here in a minute for some more specifics, but I would just say first of all it's close to 13 billion dollars through the first quarter, those dollars are hard to come by, so I don't want to shortchange the organization, I think 12.7 is where we're at at the end of this quarter which...
Alasair Syme: You know, I just think putting that in context, if you go back through since 2019 [inaudible]
Kathy Michaels: The organization is delivering on average almost two and a half billion dollars of structural cost savings per year.
Alasair Syme: and we've got a good clip in momentum going where I would tell you the organization that we have in place today.
Alasair Syme: is as excited about finding opportunities to get more efficient as they are about finding ways to get more effective and deliver more value. And so I think we're in a really good place as an organization that recognizes the critical.
Alasair Syme: with the opportunity set that we're finding by bringing together centralized organizations and really for the first time in the company's history, being able to take organizations that are very focused on a specific piece of value creation. [inaudible]
Alasair Syme: and have them look across the entire portfolio, all of our businesses, all of our assets, all around the globe, and find opportunities to leverage their expertise in a particular area of the value chain. You can imagine...
Alasair Syme: The opportunity's set there for somebody who's as big as we are that hasn't really had the opportunity to...
Alasair Syme: to sit and look across everything and find the common denominators and extract value. When you then couple that with the work that we're doing with a new enterprise system to get all the data that has historically been distributed across our organization, centralized, organized in a consistent way. Thank you.
Kathy Michaels: Frankly, I think the opportunity set is enormous and we're making good progress on that. And a lot of different areas and I'll let Kathy kind of touch on some of the specifics.
Kathy Michaels: Yeah, and so if you think about the Go Forward Plan, a large amount of the cost savings that we expect to achieve is going to come from these newer centralized organizations, and so you mentioned logistics, and then you kind of tied that with procurement. I would say procurement is alive and well, Exxon Mobil, and they're constantly looking to make sure that they're...
Kathy Michaels: really leaning into the full scale and integrated approach at Exxon Mobil in terms of how we drive our costs down. But if you think about logistics
It's as much trying to get out. [inaudible]
Kathy Michaels: Reducing the number of movements we have in logistics and making sure that we have full containers both outbound and return and not just kind of cost of a container or cost of a movement. A great example would be something like Guyana, right? Where the number of shifts we have moving every day just to supply the drilling campaign, you know, as well as the FSPOs is huge and so just taking and using better data and information to actually reduce the number of trips is where we get a big bang for our body.
for more information.
Kathy Michaels: Technology to basically drive our efficiency, reduce our overhead costs.
Kathy Michaels: by doing things in a more automated fashion. It's still an area where we have a significant opportunity. We recently did a larger implementation of a software platform called Blackline that we use in the accounting space. And it's literally enabled us to save tens of thousands of hours of what was very manually intensive work because we can now automate it. But a lot of this detail was in the data and being able to
Speaker Change: Corporation to really make sure we're instilling best practices across our entire circuit. So as we look forward, I'd say you're going to see more and more savings being driven from those centralized organizations. And importantly, this is sustainable cost savings. Thanks.
Speaker Change: All our organizations really take on the accountability for and just drive every single day.
Speaker Change: I appreciate that. No intention, Darren, and Kathy, I'm sure to use the $700 million. It's just a rounding number in my mind. Thank you. Yeah, no problem, Roger. We liked around that point as $12.7. Fair enough.
The next question is from Bob Brackett of Bernstein Research.
Bob Brackett: Good morning, a question around tariffs, and as they relate to your project organization, so how should we think about moving modules equipment into maybe US projects?
Speaker Change: and one who tariffs due to that and what is the project organization do to make sure you hit your CapEx and a version to deliver on top.
Speaker Change: Sure, thank you Bob, good morning. I'd say it's a project's organization activity as well as a procurement and our supply chain so it is a whole corp effort in terms of managing them.
Speaker Change: The specifics of the tariffs, how they manifest themselves. I would say, generally speaking, for the things that are in flight, where we've got work going on in contract, things with FID, I think the way we've structured those contracts in this position, where we're at with each of those, we're pretty well.
Speaker Change: Very quickly say that to date what we've seen in the work that we've done and the effort of the organization to minimize the impact we don't today see
Speaker Change: a material impact on what we're doing in our project's organization that would.
Speaker Change: or frankly change the economics and returns associated with this project. Exxon Mobil Corp,
Speaker Change: It's still early days, but I got a lot of confidence that the organization has got a lot of levers to pull to manage that. I would also tell you that I think there is a sensitivity by the Trump administration and other governments around the world to...
Speaker Change: To not severely impact the energy sector and the products that we produce, I think there's a very broad recognition of the critical role.
Speaker Change: of the products that we produce and each of their economies that recognize that what we do actually fuels the engines of their economy and so there's a lot of sensitivity around that.
Speaker Change: and what we've found in discussions around the world is governments want to understand potential implications and are taking those things into consideration. So I would tell you today we're certainly not...
Speaker Change: Amune to it, but I do believe we're well positioned to manage it and today we haven't seen any significant issues or impact or are not forecasting any.
Very clear. Thank you
You bet. Thank you
The next question is from Josh Silverstein of UBS. The next question is from Josh Silverstein,
Josh Silverstein: Good things, good morning guys. Back at the upstream spotlight, you highlighted how Exxon was kind of downshifting away from drug gas production. It's probably more related to the lower 48, but just given the improving demand outlook, you're taking potential shift in strategy here, or is there just a lot of growth coming from the associate bucket that you can capture enough of the rising demand environment. Thanks.
Speaker Change: Yeah, no, thank you for the question. No, I don't see a shift in strategy based on what we're seeing today. I mean obviously we've got a lot of associated gas.
Speaker Change: We think would be competitive in the broader portfolio, but it's not the priority today.
Speaker Change: I mean, we're obviously paying attention to how the markets develop, but frankly our investment decisions, the strategies that we've put in place are more anchored to what we think are a long term fundamentals.
Speaker Change: and we're going to respond and take advantage to short-term dynamics if we believe they're going to stick around long enough to...
Speaker Change: Deliver some additional value but no shift in strategy, no shift in the kind of long-term how we're thinking about market development and where our emphasis should be.
The next question is from Ryan Todd of Piper Sandler.
Ryan Todd: Good, thanks. Refining performance, our energy products performance was very strong in the first quarter. I wonder if you could comment on any particular dryers of that and how do you see?
Ryan Todd: The market evolving from here over the course of the year as you think about supply demand, margins, etc.
Ryan Todd: is really a reflection of a lot of hard work that's been going on for many years now.
James Chapman, www.jameschapman.com
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Ryan Todd: And then there's for the ones that we didn't feel had the competitive position that we wanted and didn't have this didn't fit with our strategy.
Ryan Todd: We've been doing a lot of work to high grade our facilities and to sell those where those assets to companies that saw a better fit with their strategies and so we've done a really good job of high grading of the portfolio and really concentrating on the importance. [inaudible]
Refineries,
and then with our global operations organization, really stepping back.
Ryan Todd: and Improve Environmental Performance. And so I would say across our entire circuit a lot of focus on the rigor in the excellence and execution of running refineries. And we've seen huge value in that reliability.
Ryan Todd: is up and cost her down so it's a great combination so those things I think all come together.
Ryan Todd: to give us a very high performing, refining business that can, whether the ups and downs are on the ground.
Ryan Todd: I think going forward really tough to say exactly how the year is going to play out. There is certainly sufficient refining capacity out there.
Ryan Todd: We're seeing better margins in the second quarter than we experienced in the first quarter. I expect some of that will hold just given the seasonality, but
Ryan Todd: Operations, and I think that strategy as paying off, certainly paid out in the fourth and the first quarter, expected to pay off going forward.
Ryan Todd: All right, thanks Ryan, and thanks everybody for joining the call and for your questions. We're going to post the transcript of this call to the investors section of our website by early next week.
Ryan Todd: We hope everyone has a good weekend and we look forward to connecting again later this month during our annual shareholders meeting.
which is on May 28th. [inaudible]
Dr.
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[inaudible] Dr.
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Thanks for watching!
[inaudible] Dr.