Q2 2026 Exxon Mobil Corp Earnings Call

July 31, 2026

Speaker #1: Good morning, everyone. Welcome to ExxonMobil's earnings call. Today's call is being recorded. We appreciate you joining us. I'm Jim Chapman, and I'm joined by Darren Woods, Chairman and Chief Executive Officer.

James Chapman: Good morning, everyone. Welcome to ExxonMobil's earnings call. Today's call is being recorded. We appreciate you joining us. I'm Jim Chapman, and I'm joined by Darren Woods, Chairman and Chief Executive Officer, and Neil Hansen, Senior Vice President and Chief Financial Officer. This quarter's presentation and prerecorded remarks are available on the investors section of our website. They're meant to accompany this quarter's earnings release, which is posted in the same location. During today's presentation, we'll make forward-looking remarks, including comments on our long-term plans, which are subject to risks and uncertainties. Please read our cautionary statement on Slide two. You can find more information on the risks and uncertainties that apply to any forward-looking statements in our SEC filings on our website. We also provide supplemental information at the end of our earnings slides, which are also posted on our website.

Jim Chapman: Good morning, everyone. Welcome to ExxonMobil's earnings call. Today's call is being recorded. We appreciate you joining us. I'm Jim Chapman, and I'm joined by Darren Woods, Chairman and Chief Executive Officer, and Neil Hansen, Senior Vice President and Chief Financial Officer. This quarter's presentation and prerecorded remarks are available on the investors section of our website. They're meant to accompany this quarter's earnings release, which is posted in the same location. During today's presentation, we'll make forward-looking remarks, including comments on our long-term plans, which are subject to risks and uncertainties. Please read our cautionary statement on Slide two. You can find more information on the risks and uncertainties that apply to any forward-looking statements in our SEC filings on our website. We also provide supplemental information at the end of our earnings slides, which are also posted on our website.

Speaker #1: And Neil Hansen, Senior Vice President and Chief Financial Officer. This quarter's presentation and prerecorded remarks are available on the Investors section of our website.

Speaker #1: They're meant to accompany this quarter's earnings release, which is posted in the same location. During today's presentation, we'll make forward-looking remarks, including comments on our long-term plans, which are subject to risks and uncertainties, please read our cautionary statement on slide 2.

Speaker #1: You can find more information on the risks and uncertainties that apply to any forward-looking statements in our SEC filings available on our website. We also provide supplemental information at the end of our earnings slides, which are also posted on our website.

Speaker #1: And now, I'll turn it over to Darren. For opening remarks.

James Chapman: Now I'll turn it over to Darren for opening remarks.

Jim Chapman: Now I'll turn it over to Darren for opening remarks.

Speaker #2: Good morning, and thank you for joining us. Unfortunately, as all of you are aware, the conflict in the Middle East continued through the second quarter.

Darren Woods: Good morning, and thank you for joining us. Unfortunately, as all of you are aware, the conflict in the Middle East continued to Q2, impacting our employees, partners, and operations in the region. I want to begin this morning by recognizing the service of the men and women engaged in the conflict, and the hardships being endured and losses suffered by those in the region. They remain at the forefront of our thoughts, and we continue to pray for a quick resolution. As a company, we remain committed to mitigating the global impact by maximizing production and providing the energy and products essential to modern life. While we didn't anticipate the current situation, we were prepared for it. In our markets, disruption is inevitable.

Speaker #2: Impacting our employees, partners, and operations in the region. I want to begin this morning by recognizing the service of the men and women engaged in the conflict in the hardships being endured and losses suffered by those in the region.

Speaker #2: They remain at the forefront of our thoughts, and we continue to pray for a quick resolution. As a company, we remain committed to mitigating the global impact by maximizing production and providing the energy and products essential to modern life.

Speaker #2: What we didn't anticipate the current situation we were prepared for it. In our markets, disruption is inevitable. Establishing globally diverse production at scale across value chains built on a foundation of durable advantages provides a robust platform for creating value through price cycles and market disruptions.

Darren Woods: Establishing globally diverse production at scale across value chains, built on a foundation of durable advantages, provides a robust platform for creating value through price cycles and market disruptions. Q2 demonstrates the strength of our approach. Despite the temporary loss of approximately 10% of our Upstream production, we delivered exceptional financial results, including industry-leading earnings of $14.5 billion and cash flow from operations of $23.6 billion. Performance was strong across the company. In the Upstream, excluding the Middle East, we delivered our highest production volumes in more than two decades. In Energy Products, our integrated US Gulf Coast refining operations ran reliably as global diesel supply tightened. The business delivered record Q2 diesel production, helping meet market needs.

Speaker #2: The second quarter demonstrates the strength of our approach. Despite the temporary loss of approximately 10% of our upstream production, we delivered exceptional financial results, including industry-leading earnings of $14.5 billion and cash flow from operations of $23.6 billion.

Speaker #2: Performance was strong across the company. In the Upstream, excluding the Middle East, we delivered our highest production volumes in more than two decades. In Energy Products, our integrated U.S.

Speaker #2: Gulf Coast refining operations ran reliably, as global diesel supply tightened. The business delivered record second-quarter diesel production, helping meet market needs. In chemical products, our North American facilities with advantaged feed and record first-half reliability helped meet the shortfall in supply caused by disruptions in the Middle East.

Darren Woods: In Chemical Products, our North American facilities with advantaged feed and record H1 reliability helped meet the shortfall in supply caused by disruptions in the Middle East, driving a roughly 180% increase in chemical product margins versus Q1. In Specialty Products, our integrated approach down the value chain, reformulation capabilities, global footprint, and strong execution helped meet customer needs despite significant supply challenges, delivering best-ever base stock margins and record quarterly and H1 adjusted earnings. Guyana remains one of the clearest examples of our advantaged growth. In the quarter, Guyana delivered gross production volumes of approximately 900,000 barrels per day. Berbice, our fifth FPSO, set sail toward Guyana in June and remains on track for startup by the end of the year, the next major step in Guyana's continued development.

Speaker #2: Driving a roughly 180% increase in chemical product margins versus the first quarter. In specialty products, our integrated approach down the value chain, reformulation capabilities, global footprint, and strong execution helped meet customer needs despite significant supply challenges.

Speaker #2: Delivering best-ever base stock margins and record quarterly and first-half adjusted earnings. Guyana remains one of the clearest examples of our advantaged growth. In the quarter, Guyana delivered gross production volumes of approximately $900,000 barrels per day.

Speaker #2: Payara, our fifth FPSO, set sail toward Guyana in June, and remains on track for startup by the end of the year—another major step in Guyana's continued development.

Speaker #2: Long Tail is on the path toward final investment decision, and we are evaluating the potential for a ninth FPSO. The success of this development has set a new standard for the industry and, frankly, has exceeded our own expectations.

Darren Woods: Longtail is on the path toward final investment decision, and we are evaluating the potential for a ninth FPSO. The success of this development has set a new standard for the industry and frankly has exceeded our own expectations. Delivering on tight schedules at industry-leading cost with strong reliability and optimized production has resulted in recovering our capital and cost nearly two years earlier than anticipated, increasing NPV and desaturating the cost bank. As a result, our volume entitlements will change as reflected in our 2030 plan. As always, our focus remains on value, not volume. Turning to the Permian, this quarter, we set another production record of more than 1.8 million oil equivalent barrels per day. More importantly, we continued to improve recovery and lower capital costs through new technologies deployed at scale.

Speaker #2: Delivering on tight schedules at industry-leading cost, with strong reliability and optimized production, has resulted in recovering our capital and costs nearly two years earlier than anticipated.

Speaker #2: Increasing NPV and desaturating the cost bank. This is great news. But as a result, our volume entitlements will change, as reflected in our 2030 plan.

Speaker #2: As always, our focus remains on value, not volume. Turning to the Permian, this quarter we set another production record of more than $1.8 million oil-equivalent barrels per day.

Speaker #2: More importantly, we continue to improve recovery and lower capital costs through new technologies deployed at scale. Our industry-leading acreage position supports extended reach development, including four-mile laterals that drive superior capital efficiency.

Darren Woods: Our industry-leading acreage position supports extended reach development, including 4-mile laterals that drive superior capital efficiency. In the H1 of the year, we drilled more than 80 4-mile wells, supported by our Houston-based remote operations center and real-time data that helps ensure safe, efficient, and effective execution. During the quarter, we had to work through some complex conditions. Logistics were tight, supply chains were constrained, and customers were short of critical products. Our global trading and supply chain organization put our new operating model to work, optimizing feedstock and product placement, balancing supply across regions, and responding to localized disruptions. Those actions kept our operations running and customers supplied and helped avoid roughly $750 million in annual disruption cost through advanced modeling, fleet reallocations, product reformulations, and alternate supply sources. At the same time, we continue to make progress on our transformation.

Speaker #2: In the first half of the year, we drilled more than 80 four-mile wells. Supported by our Houston-based remote operations center and real-time data that helps ensure safe, efficient, and effective execution.

Speaker #2: During the quarter, we had to work through some complex conditions. Logistics were tight, supply chains were constrained, and customers were short of critical products.

Speaker #2: Our global trading and supply chain organization put our new operating model to work—optimizing feedstock and product placement, balancing supply across regions, and responding to localized disruptions.

Speaker #2: Those actions kept our operations running, and customer supplied. And helped avoid roughly $750 million in annual disruption cost. Through advanced modeling, fleet reallocations, product reformulations, and alternate supply sources.

Speaker #2: At the same time, we continue to make progress on our transformation. On July 1, we integrated upstream operations into our global operations organization, bringing together approximately 31,000 employees across more than 150 sites in 48 countries.

Darren Woods: On 1 July, we integrated upstream operations into our global operations organization, bringing together approximately 31,000 employees across more than 150 sites in 48 countries. This is an industry-first operating model. The objective is clear: make the most of what we have while raising the standard for safe, reliable, and efficient performance across all our assets. With this new organization, we expect to deliver improved margins and industry-leading operations excellence, improving safety, reliability, maintenance costs, and turnarounds across the portfolio. We are also advancing our enterprise-wide process and data platform transformation. As I've said before, this is redesigning end-to-end processes and connecting data, transactions, and decision-making across every business, geography, and function. Early deployments have gone well, building a strong foundation for larger rollouts in 2027. The work is already simplifying processes, improving line of sight, and replacing fragmented reporting with more consistent enterprise data.

Speaker #2: This is an industry-first operating model. The objective is clear: make the most of what we have, while raising the standard for safe, reliable, and efficient performance across all our assets.

Speaker #2: With this new organization, we expect to deliver improved margins and industry-leading operational excellence—improving safety, reliability, maintenance costs, and turnarounds across the portfolio. We are also advancing our enterprise-wide process and data platform transformation.

Speaker #2: As I've said before, this is redesigning end-to-end processes. And connecting data, transactions, and decision-making across every business geography and function. Early deployments have gone well.

Speaker #2: Building a strong foundation for larger rollouts in 2027. The work is already simplifying processes, improving line of sight, and replacing fragmented reporting with more consistent enterprise data.

Speaker #2: As it progresses, it will help us learn and act faster, better leverage our scale, and accelerate the adoption and value of AI. The value of this transformation is showing up in our results.

Darren Woods: As it progresses, it will help us learn and act faster, better leverage our scale, and accelerate the adoption and value of AI. The value of this transformation is showing up in our results. Cumulative structural cost savings have increased to $16.3 billion since 2019, with centralized organizations contributing nearly half of the year-to-date savings. Financially, this was a strong quarter with more than $14 billion of earnings, more than $17 billion of free cash flow, and a more than $7 billion reduction in net debt. That strength allows us to keep investing in advantaged opportunities, return surplus cash to shareholders, and maintain one of the strongest balance sheets in the industry. Cash capital expenditures were roughly $7 billion, and we returned more than $9 billion to shareholders through dividends and share repurchases.

Speaker #2: Cumulative structural cost savings have increased to $16.3 billion since 2019. With centralized organizations contributing nearly half of the year-to-date savings. Financially, this was a strong quarter, with more than $14 billion of earnings, more than $17 billion of free cash flow, and a more than $7 billion reduction in net debt.

Speaker #2: That strength allows us to keep investing in advantaged opportunities, return surplus cash to shareholders, and maintain one of the strongest balance sheets in industry.

Speaker #2: Cash capital expenditures were roughly $7 billion. And we returned more than $9 billion to shareholders through dividends and share repurchases. Finally, in the quarter, shareholders overwhelmingly supported redomiciling ExxonMobil from New Jersey to Texas.

Darren Woods: Finally, in the quarter, shareholders overwhelmingly supported redomiciling ExxonMobil from New Jersey to Texas, which we completed on 1 July. The move aligns our legal home with our headquarters and where we have operated for more than 3 decades while providing a stable, predictable, and efficient governance framework that supports sound decision-making, long-term value creation, and shareholder rights. I want to thank our shareholders for their support and the quality dialogue we had across the years' engagements. Stepping back, the Q2 was shaped by disruption, but defined by execution. The market benefit was real, and so was the value created by the choices we have made over many years to strengthen the portfolio, lower our cost structure, and improve how we operate through deeper integration and technology-enabled execution. That is the point of our transformation.

Speaker #2: Which we completed on July 1st. The move aligns our legal home with our headquarters and where we have operated for more than three decades, while providing a stable, predictable, and efficient governance framework that supports sound decision-making long-term value creation and shareholder rights.

Speaker #2: I want to thank our shareholders for their support, and for the quality dialogue we've had across the years' engagements. Stepping back, the second quarter was shaped by disruption.

Speaker #2: But defined by execution. The market benefit was real, and so was the value created by the choices we have made over many years to strengthen the portfolio.

Speaker #2: Lower our cost structure and improve how we operate, through deeper integration and technology-enabled execution. That is the point of our transformation. We are building a company that can perform through disruption and deliver superior, long-term shareholder value across cycles.

Darren Woods: We are building a company that can perform through disruption and deliver superior long-term shareholder value across cycles. Thank you.

Speaker #2: Thank you.

Speaker #1: Thank you, Darren. Before we move to Q&A, two things to note. First, as a reminder, the investor section of our website provides further data on our results and operations, and we encourage investors to take a look.

Neil A. Hansen: Thank you, Darren. Before we move to Q&A, two things to note. First, as a reminder, the investor section of our website provides further data on our results and operations, we encourage investors to take a look. Second, I want to highlight that we plan to publish our annual global outlook in September. A comprehensive report detailing our latest views on global energy demand and supply through 2050, which forms the basis of our long-term business planning. With that, we can move to Q&A. As a reminder, we ask each participant to keep it to one question. Operator will ask you to please open the line for the first question.

Neil Hansen: Thank you, Darren. Before we move to Q&A, two things to note. First, as a reminder, the investor section of our website provides further data on our results and operations, we encourage investors to take a look. Second, I want to highlight that we plan to publish our annual global outlook in September. A comprehensive report detailing our latest views on global energy demand and supply through 2050, which forms the basis of our long-term business planning. With that, we can move to Q&A. As a reminder, we ask each participant to keep it to one question. Operator will ask you to please open the line for the first question.

Speaker #1: And second, I want to highlight that we plan to publish our annual global outlook in September. A comprehensive report detailing our latest views on global energy demand and supply, through 2050, which forms the basis of our long-term business planning.

Speaker #1: So with that, we can move to Q&A. As a reminder, we ask each participant to keep it to one question. An operator will ask you to please open the line for the first question.

Speaker #3: 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 1 on your telephone.

Operator: 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 1 on your telephone. The first question comes from Stephen Richardson of Evercore.

Speaker #3: The first question comes from Steve Richardson of Evercore.

Speaker #1: Hey, good morning. Darren, I just wonder if we could start on Guyana. Obviously, what we've all known is a really high-quality project. Can you just talk about this desaturation point?

Stephen Richardson: Hey, good morning. Darren, I was wondering if we could start on Guyana. Obviously, what we've all known is a really high-quality project. Can you just talk about this desaturation point, obviously in light of cost, performance, and higher commodity price, and maybe just how the timing compares to maybe what your previous expectations were. Also curious if you could talk a little bit about exploration. There's a mention in the disclosure about using AI tools, and generating prospects. I think people are also curious about what the exploration outlook in Guyana is, particularly as you think about parts of the block that maybe are underexplored, close to the maritime boundary.

Speaker #1: Obviously, in light of cost, performance, and higher commodity prices—and maybe just how the timing compares to what your previous expectations were. Also, I’m curious if you could talk a little bit about exploration.

Speaker #1: There's a mention in the disclosure about using AI tools and generating prospects. I think people are also curious about what the exploration outlook in Guyana is, particularly as you think about parts of the block that maybe are under-explored close to the maritime boundary.

Speaker #2: Sure. Good morning, Steve. Thanks for your question. I think, as you point out, it's a real success story—what we've achieved in Guyana.

Darren Woods: Sure. Good morning, Steve. Thanks for your question. I think as you point out, it's a real success story in what we've achieved in Guyana, delivering, frankly, the production units faster than we had originally anticipated, at a lower cost, running those assets above the investment bases. Obviously, the market prices have been higher than our base assumptions. All that means more cash sooner, which is good for the project, good for NPV, good for Guyana and the people of Guyana. Obviously, we recover our costs back faster and therefore desaturate quicker, which is a good story. I would say that was a moving target as prices manifested themselves, as we delivered those units and continued to grow production, we kept updating it.

Speaker #2: We are delivering, frankly, the production units faster than we had originally anticipated, at a lower cost. We're running those assets above the investment basis, and then, obviously, the market prices have been higher than our base assumption.

Speaker #2: So all that means more cash sooner, which is good for the project, good for NPV, good for Guyana and the people of Guyana. Obviously, we recover our costs back faster and therefore de-saturate quicker.

Speaker #2: Which is a good story, and I would say we that was a moving target as prices manifested themselves. As we delivered those units and continued to grow production, we kept updating it and then based on price forecast.

Darren Woods: Based on price forecast, our assessment would happen later this year, early into next year, and that's obviously come forward now with where prices have been. I think a really good news story. With respect to exploration, I think too, another good news story. We obviously have a large chunk of acreage, which is in force majeure, waiting for the ultimate ruling from the International Court of Justice on the Venezuela dispute, and we'll see what happens there. We feel there's an opportunity then to start shooting seismic and understand what that acreage potentially holds. We've got more work to do in the acreage that we've already shot and the work that we've been doing.

Speaker #2: Our assessment was scheduled for later this year or early next year, but that's obviously been moved forward now given where prices have been. So, I think that's a really good news story.

Speaker #2: With respect to exploration, I think too, another good news story we obviously have a large chunk of acreage, which is in force majeure, waiting for the ultimate ruling from the International Court of Justice on the Venezuela dispute, when we'll see what happens there.

Speaker #2: We feel there's an opportunity, then, to start shooting seismic and understand what that acreage potentially holds. And we've got more work to do in the acreage that we've already shot and the work that we've been doing.

Speaker #2: I think Neil Chapman had mentioned at a prior conference this year that we've really put a lot of effort into artificial intelligence and training models, based on what we found already, all the drilling that we've done, the characterization of that subsurface, and of unleash that and the rest of the block, and have four new discovery opportunities above and beyond what we thought were opportunities.

Darren Woods: I think Neil Chapman had mentioned at a prior conference this year that we really put a lot of effort into artificial intelligence and training models based on what we've found already, all the drilling that we've done, the characterization of that subsurface, and have unleashed that in the rest of the block and have four new discovery opportunities above and beyond what we thought were opportunities. We're optimistic there. Obviously, a lot more work to do to confirm those, but I think our view is we're not done yet in Guyana, and we continue to see a really bright future there.

Speaker #2: So, we're optimistic there. Obviously, there's a lot more work to do to confirm those, but I think our view is we're not done yet in Guyana, and we continue to see a really bright future there.

Speaker #1: Maybe Darren just to add to the comments on Guyana. I think this reinforces why we are the partner of choice, especially for developments of this scale.

Neil A. Hansen: Maybe, Darren, just to add to the comments on Guyana, I think this reinforces why we are the partner of choice, especially for developments of this scale. If you look at the desaturation, Darren mentioned the price impact, but even if you took out that price impact, we saw a two-year acceleration of our investment recovery. Those go back to the things that we mentioned, the ability to execute these projects at industry-leading cost and schedule, running the FPSOs at above 98% reliability, optimizing, being able to produce at 100,000 barrels a day above the investment basis. Even without the price impact, we're seeing accelerated recovery of our investment. As Darren mentioned in his opening remarks, this is about value, not volume. Going forward, we're going to see two times the level of free cash flow in 2030 than we saw in 2025.

Neil Hansen: Maybe, Darren, just to add to the comments on Guyana, I think this reinforces why we are the partner of choice, especially for developments of this scale. If you look at the desaturation, Darren mentioned the price impact, but even if you took out that price impact, we saw a two-year acceleration of our investment recovery. Those go back to the things that we mentioned, the ability to execute these projects at industry-leading cost and schedule, running the FPSOs at above 98% reliability, optimizing, being able to produce at 100,000 barrels a day above the investment basis. Even without the price impact, we're seeing accelerated recovery of our investment. As Darren mentioned in his opening remarks, this is about value, not volume. Going forward, we're going to see two times the level of free cash flow in 2030 than we saw in 2025.

Speaker #1: And if you look at the desaturation—and Darren mentioned the price impact—but even if you took out that price impact, we saw a two-year acceleration of our investment recovery.

Speaker #1: And those go back to the things that we mentioned. The ability to execute these projects that industry-leading cost and schedule running the FPSOs at above 98% reliability, optimizing, being able to produce at 100,000 barrels a day above the investment basis.

Speaker #1: So even without the price impact, we're seeing accelerated recovery of our investment. And as Darren mentioned in his opening remarks, this is about value, not volume.

Speaker #1: And going forward, we're going to see two times the level of free cash flow in 2030 than we saw in 2025. So again, it just speaks to the tremendous success that we're seeing in Guyana.

Neil A. Hansen: Again, just speaks to the tremendous success that we're seeing in Guyana.

Neil Hansen: Again, just speaks to the tremendous success that we're seeing in Guyana.

Speaker #1: Thanks very much.

Stephen Richardson: Thanks very much.

Speaker #3: The next question comes from Neil Mehta of Goldman Sachs.

Operator: The next question comes from Neil Mehta of Goldman Sachs.

Speaker #4: Yeah, thank you so much. Darren, just love your perspective on the business that you spent a lot of time growing up in on the refining system.

Neil Mehta: Yeah, thank you so much. Darren, just love your perspective on the business that you spent a lot of time growing up and on the refining system. It's obviously the bottleneck in the petroleum system right now, and margins are exceptionally high. Two perspectives on that. One is, how do you see the situation evolving as you think about the products? Neil Hansen, this is probably a question for you on the quarter itself. It did feel like relative to some of the independents, the refining earnings were a little softer than I would've thought, maybe it was more of the timing or operational things, but how do you see that progressing as we move into Q3?

Speaker #4: It's obviously the bottleneck in the petroleum system right now, and margins are exceptionally high. So two perspectives on that. One is, how do you see the situation evolving as you think about the products?

Speaker #4: And then Neil Hansen, that's probably a question for you on the quarter itself. It did feel like relative to some of the independence, the refining earnings were a little softer than I would have thought.

Speaker #4: And so maybe there was some it was more of a timing or operational things, but how do you see that progressing as we move into the third quarter?

Speaker #2: Good morning, Neil. I'll start and then hand it over to the other Neil. As I mentioned this morning, we are a very large refinery—much larger than any of the other IOCs.

Darren Woods: Yeah. Good morning, Neil. I'll start and then hand it over to the other Neil. As I mentioned this morning, we are a very large refinery, much larger than any of the other IOCs. In fact, we're the number two in size in the world, behind China, and outside of China, we are the largest refiner. We've got a good footprint. As you know, we've spent the last 10 years really focused on optimizing that portfolio, divesting refineries that we didn't feel like we could move to the left of the cost of supply curve, and then investing in those refineries that we felt like had long-term strategic value and high grading the yield on those refineries. Today, we have a portfolio that will be very successful in low-margin environments, and then obviously in higher-margin environments, even more successful.

Speaker #2: In fact, we're number two in size in the world, behind China, and outside of China, we are the largest refinery. So we've got a good footprint.

Speaker #2: And as you know, we have been we've spent the last 10 years really focused on optimizing that portfolio, divesting refineries that we didn't feel like we could move to the left of the cost of supply curve, and then investing in those refineries that we felt like had long-term strategic value and high grading the yield on those refineries.

Speaker #2: So today, we have a portfolio that will be very successful in low-margin environments, and then, obviously, in higher-margin, the organization is now very focused, in the short term, with these significant constraints in product flow, on maximizing production and getting the most needed products to the market and meeting customer demands, where it's such a critical need today that it's not being met.

Darren Woods: The organization is now very focused on, in the short term, with these significant constraints in product flow, maximizing production and getting the most needed products to the market and meeting customer demands, where there's such a critical need today that's not being met. I see that, frankly, the challenge here is obviously with the Strait closed, we've got about roughly 3 million barrels a day of capacity that's not available to the marketplace. China's stopped exporting. There's another couple million barrels a day of refinery capacity that is not available to the market. Of course, Ukraine's been pretty effective at taking Russia refinery capacity out, another million barrels a day or so of Russian refining capacity that in the past was providing product to the broader market. With all those that supply out, we're well below available capacity, frankly, that I've ever seen.

Speaker #2: I see that, frankly, the challenge here is obviously with the stranded crude. We've got roughly 3 million barrels a day of capacity that's not available to the marketplace.

Speaker #2: China has stopped exporting. There's another couple of million barrels a day of refinery capacity that is not available to the market. And then, of course, Ukraine has been pretty effective at taking Russian refinery capacity out.

Speaker #2: And so another million barrels a day or so of Russian refining capacity that in the past was providing product to the broader market. So with all those that supply out, we're well below available capacity.

Speaker #2: Frankly, that I've ever seen. If you exclude COVID, where there was no demand, I've never seen the available capacity relative to demand as low as it is today.

Darren Woods: If you exclude COVID, where there was no demand, I've never seen the available capacity relative to demand as low as it is today. It's going to take a while for the industry to climb its way out of that hole. From our perspective, we think we're going to continue to see a very robust refining market with very high margins. Of course, our job will be to continue to push as hard as we can to maximize production and try to meet that need, because we do recognize that these high margins lead to high product prices, which we also know has a significant impact on consumers and people's pocketbooks. We're doing our best to put as much product out there as we can, and I think you see that in the results.

Speaker #2: It's going to take a while for the industry to kind of climb its way out of that hole. And so from our perspective, we think we're going to continue to see a very robust refining market with very high margins and, of course, our job will be to continue to push as hard as we can to maximize production and try to meet that need.

Speaker #2: Because we do recognize that these high margins lead to high product prices, which we also know has a significant impact on consumers and people's pocketbooks.

Speaker #2: So we're doing our best to put as much product out there as we can, and I think you see that in the results. I'll just touch on the mix issue and what you're seeing.

Darren Woods: I'll just touch on the mix issue and what you're seeing at other refiners versus ExxonMobil. Nobody has the portfolio that we have. Nobody has the mix that we have, nobody has the geographic footprint. There's a lot more mix and variability that happens around the market than maybe a standalone US refiner or some of these more narrowed refinery companies. With that, I'll see if Neil's got anything else to add.

Speaker #2: It's other refiners versus ExxonMobil. Nobody has the portfolio that we have. Nobody has the mix that we have. Nobody has the geographic footprint. So there's a lot more mix and variability that kind of happens around the market than maybe a standalone US refiner or some of these more narrowed refinery companies.

Speaker #2: But with that, I'll let's see if Neil's got anything else to add.

Speaker #1: Yeah, let me—maybe before I get to your question on the quarter, Neil—talk a little bit about the energy products business. When you look at what we've done over time in terms of investments in our refining capacity, improving the complexity, and taking advantage of the scale of our footprint...

Neil A. Hansen: Yeah. Let me, maybe before I get to your question on the quarter, Neil, talk a little bit about the energy products business. You look at what we've done over time in terms of investments in our refining capacity, improving the complexity, and taking advantage of the scale of our footprint, the portfolio high grading that we've done, and then the day-to-day efforts that we put into place to optimize throughput and capacity, and all those things, combined with the growing capability in trading, really has resulted in a step change in earnings in that business, in energy products. In fact, if you look at the contribution from energy products to our overall business line earnings, it's gone from about 9% to about 23% in the last five years. That increase just speaks to the investments we've made.

Neil Hansen: Yeah. Let me, maybe before I get to your question on the quarter, Neil, talk a little bit about the energy products business. You look at what we've done over time in terms of investments in our refining capacity, improving the complexity, and taking advantage of the scale of our footprint, the portfolio high grading that we've done, and then the day-to-day efforts that we put into place to optimize throughput and capacity, and all those things, combined with the growing capability in trading, really has resulted in a step change in earnings in that business, in energy products. In fact, if you look at the contribution from energy products to our overall business line earnings, it's gone from about 9% to about 23% in the last five years. That increase just speaks to the investments we've made.

Speaker #1: The portfolio high grading that we've done, and then the day-to-day efforts that we put into place to optimize throughput and capacity, and all those things combined with a growing capability in trading, really has resulted in a step change in earnings in that business, in energy products.

Speaker #1: In fact, if you look at the contribution from energy products to our overall business line earnings, it's gone from about 9% to about 23% in the last five years.

Speaker #1: That increase just speaks to the investments we've made. It speaks to how well we're running, and it speaks to the trading capability that we've built.

Neil A. Hansen: It speaks to how well we're running, and speaks to the trading capability that we've built. Operationally, we ran really well in the quarter. You look at the US Gulf Coast refineries, the reliability exceeded 95% in the quarter. Again, we feel really good about what we've done to strengthen that business over time and how we operated in the Q2. I think when you look at the quarter, relative to consensus, I think some of that is, as Darren talked about, there are a lot of moving parts, especially with the volatility and the disruption that we saw. I think that had an impact on projecting some of those refining margins, but no underlying concerns with how that business has performed, and we're benefiting from the investments and how well we're operating in energy products.

Neil Hansen: It speaks to how well we're running, and speaks to the trading capability that we've built. Operationally, we ran really well in the quarter. You look at the US Gulf Coast refineries, the reliability exceeded 95% in the quarter. Again, we feel really good about what we've done to strengthen that business over time and how we operated in the Q2. I think when you look at the quarter, relative to consensus, I think some of that is, as Darren talked about, there are a lot of moving parts, especially with the volatility and the disruption that we saw. I think that had an impact on projecting some of those refining margins, but no underlying concerns with how that business has performed, and we're benefiting from the investments and how well we're operating in energy products.

Speaker #1: And operationally, we ran really well in the quarter. If you look at the US Gulf Coast refineries, the reliability exceeded 95% in the quarter. So, again, we feel really good about what we've done to strengthen that business over time and how we operated in the second quarter.

Speaker #1: I think when you look at the quarter, relative to consensus, I think some of that is, as Darren talked about, I mean, there are a lot of moving parts especially with the volatility and the disruption that we saw.

Speaker #1: So, I think that had an impact on projecting some of those refining margins. But no underlying concerns with how that business has performed, and we're benefiting from the investments and how well we're operating in energy products.

Speaker #4: Yeah, very clear. Thanks, Neil. Thanks, Darren.

Neil Mehta: Yeah. Very clear. Thanks, Neil. Thanks, Darren.

Speaker #1: Thank you.

Neil A. Hansen: Thank you.

Neil Hansen: Thank you.

Speaker #2: Thank you.

Darren Woods: Thank you.

Speaker #5: The next question comes from Arun Jayaram with JP Morgan.

Operator: The next question comes from Arun Jayaram with JPMorgan.

Speaker #6: Yeah, good morning, and thanks for taking my question. Darren, I was wondering if you could help us understand what you're seeing on the ground in terms of the Strait of Hormuz.

Arun Jayaram: Yeah. Good morning. Thanks for taking my question. Darren, I was wondering if you could help us understand what you're seeing on the ground in terms of the Strait of Hormuz. Perhaps you could highlight what you saw in July, just given the disruption impacts. I guess my overall question as well, wanted to see how you're thinking about with your partner, Exxon's intention to invest in the repair of the two Qatar LNG trains. If you've come up with your-

Speaker #6: Perhaps you could highlight what you saw in July, just given the disruption impacts. And I guess my overall question as well—I wanted to see how you're thinking about, with your partner, Exxon’s intention to invest in the repair of the two Qatar LNG trains: if you’ve come up, with your partner, on the plans to repair those facilities.

Neil A. Hansen: partner on the plans to repair those facilities.

Neil Hansen: partner on the plans to repair those facilities.

Speaker #2: Yeah, sure. Good morning, Arun. Thanks for your question. I don't think I have a lot of additional perspective on the ground with respect to what's happening in the strait.

Darren Woods: Yeah, sure. Good morning, everyone. Thanks for your question. I don't think I have a lot of additional perspective on the ground with respect to what's happening in the Strait. I think it's fairly well covered in the media, and frankly, any discussions I tend to have with the administration is more focused on our perspective of the market and the implications of the constrained supply and how that will manifest itself. I will say, as a big supplier in the marketplace, it is ultimately down to the shipping companies and the crews on those ships to make those transits. I think the more volatility there is, the more back and forth with respect to disruptions and attacks, you create more uncertainty, more concern, and therefore less willingness to transit.

Speaker #2: I think it's fairly well covered in the media and frankly, any discussions I tend to have with the administration is more focused on our perspective of the market.

Speaker #2: And the implications of the constrained supply and how that will manifest itself. I will say, as a big supplier in the marketplace, it is ultimately down to the shipping companies and the cruise on those ships to make those transits.

Speaker #2: And I think the more volatility there is, the more back and forth with respect to disruptions and attacks, you create more uncertainty, more concern, and therefore less willingness to transit.

Speaker #2: So I think there's going to be a continued inhibition for movement, which will— even once we get things cleared up, I think it'll take some time for folks to gain some confidence there to continue to ramp things back up to a very high level. And frankly, we're prepared for that with respect to what we're trying to do.

Darren Woods: I think there's going to be a continued inhibition for movement, which will, even once we get things cleared up, I think it'll take some time for folks to gain some confidence there to continue to ramp things back up to a very high level. Frankly, we're prepared for that with respect to what we're trying to do. With respect to the broader question, our presence there and the work that we're doing with Qatar, I just come back to the medium to long-term fundamentals, which the world needs the resources in that region, and it needs to have the Strait opened and transiting back at levels it was prior to this conflict. We're convinced that that will come to be at some point in the future. I can't really predict when it'll happen or exactly what it will look like.

Speaker #2: With respect to the broader question, our presence there and the work that we're doing with Qatar, I just come back to the medium- to long-term fundamentals, which are that the world needs the resources in that region.

Speaker #2: And it needs to have the strait opened, and transiting back at the levels it was prior to this conflict. And so we're convinced that that will come to be at some point in the future.

Speaker #2: And I can't really predict when it'll happen or exactly what it will look like. I just know that it's too critical to the overall health of the world economy—and for people to meet their standards of living—to have that disrupted in perpetuity.

Darren Woods: I just know that it's too critical to the overall health of world economy and to meet people's standards of living to have that disrupted for perpetuity. It will come back. It will be needed. We've got a long relationship there. We value the partnerships we have. We're in dialogue with QatarEnergy. I think we have a significant role that we can play to bring our expertise to help expedite the repairs. We're in discussions with QE about that, and frankly, looking for the best approach there where obviously QatarEnergy and the people of Qatar benefit and ExxonMobil benefits as well.

Speaker #2: So it will come back. It will be needed. We've got a long relationship there. We value the partnerships we have. We're in dialogue with QatarEnergy.

Speaker #2: I think we have a significant role that we can play to bring our expertise to help expedite the repairs. We're in discussions with QE about that.

Speaker #2: And frankly, looking for the best approach there, where obviously QatarEnergy and the people of Qatar benefit and ExxonMobil benefits as well. And so, I think the one thing I would say about our long-standing relationship with QatarEnergy is they recognize the importance of win-win solutions, and are certainly very focused on how we figure out the path forward here.

Darren Woods: I think the one thing I would say about our long, longstanding relationship with QatarEnergy is they recognize the importance of win-win solutions and certainly very focused on how we figure the path forward here to get production back on and flowing as soon as we're able to.

Speaker #2: To get production back on and flowing as soon as we're able to.

Speaker #6: Great. Thank you.

Neil A. Hansen: Great. Thank you.

Neil Hansen: Great. Thank you.

Speaker #2: Thank you.

Darren Woods: Thank you.

Speaker #5: The next question comes from Devin McDermott of Morgan Stanley.

Operator: The next question comes from Devin McDermott of Morgan Stanley.

Speaker #7: Hey, good morning. Thanks for taking my question. Darren, you highlighted—good morning—really strong non-Middle East upstream production in the quarter, the highest in over two decades.

Devin McDermott: Hey, good morning. Thanks for taking my question.

Darren Woods: Good morning.

Devin McDermott: Morning, Darren. You highlighted really strong non-Middle East upstream production in the quarter, the highest in over two decades. You talked a little bit before about Guyana and one of the other drivers of growth is the Permian. You had volumes hit 1.8 million BOE a day in the quarter in line with your full-year guide. I know that this year marked a big step up in some of the use of advanced proppant and other new technology, and I was wondering if you could just give us an update on how that's progressing versus expectations, specifically as it relates to capital efficiency and recoveries that you're seeing there across the basin.

Speaker #7: You talked a little bit before about Guyana, and one of the other drivers of growth is the Permian. You had volumes hit 1.8 million BOE a day in the quarter, in line with your full-year guide.

Speaker #7: I know that this year marked a big step up in some of the use of advanced prop-in and other new technology. And I was wondering if you just give us an update on how that's progressing versus expectations, particularly as it relates to capital efficiency and recoveries that you're seeing there across the basin.

Speaker #1: Yeah, sure. Thanks for the question, Devin. And you touched on, I think, one of the really important variables there, which is all the progress we're making with respect to the technology portfolio.

Darren Woods: Yeah, sure. Thanks for the question, Devin. You touched on, I think, one of the really important variables there, which is all the progress we're making with respect to the technology portfolio. We've been talking for some time now that we've got 40-plus technology developments that we're working and have been going out and trialing in the field. The value of those technologies are, most of them are stackable so that you keep building on the success and drive more and more recovery, fewer wells, so less capital. I'd tell you that that portfolio continues to exceed expectations for the technologies that are successful. I put out a challenge back in 2018 for doubling recovery.

Speaker #1: We've been talking for some time now that we've got 40-plus technology developments that we're working and have been going out and trialing in the field.

Speaker #1: And the value of those technologies are most of them are stackable so that you keep building on the success and drive more and more recovery.

Speaker #1: Fewer wells, so less capital. And I'd tell you that that portfolio continues to exceed expectations for the technologies that are successful. So I put out a challenge back in 2018 for doubling recovery.

Speaker #1: We have an opportunity set that will do more than that. And when you risk it for all the uncertainties associated with that portfolio, we're getting really close to that objective, and it's just a function of continuing to deploy those technologies and getting it to a critical mass where it's transparent to the rest of the market as we continue to bring them into new production, new wells.

Darren Woods: We have an opportunity set that will do more than that. When you risk it for all the uncertainties associated with that portfolio, we're getting really close to that objective. It's just a function of continuing to deploy those technologies and getting it to a critical mass to where it's transparent to the rest of the market as we continue to bring into new production new wells. Feel really good about that. I'm really confident in what the team's doing. A lot of energy and motivation by the technology organization and our Permian organization to deploy the technology and to see the benefits of that. We're more than on track.

Speaker #1: So I feel really good about that. I really confident in what the team's doing. A lot of energy and motivation by the technology organization and our Permian organization to deploy the technology and to see the benefits of that.

Speaker #1: So we're more than on track.

Speaker #2: Yeah, I think Darren, maybe just add to that. I mean, there is a lot of excitement around the technology that's being developed and will be deployed.

Neil A. Hansen: Yeah, I think, Darren, maybe just to add to that, there is a lot of excitement around the technology that's being developed and will be deployed. I think you can easily look past the expertise and the technology that's already being used in the Permian. You look at things like extended reach laterals. We're leading the Permian in long lateral development. I think in the opening remarks, we mentioned 83 4-mile wells that we've drilled year to date. If you look back and you look at all the Permian-producing wells since 2020, anything above 3 miles or longer, we have 1,200 wells. I think our nearest competitor is around 400, and you would have to go to the next six competitors to get to that same level of 1,200.

Neil Hansen: Yeah, I think, Darren, maybe just to add to that, there is a lot of excitement around the technology that's being developed and will be deployed. I think you can easily look past the expertise and the technology that's already being used in the Permian. You look at things like extended reach laterals. We're leading the Permian in long lateral development. I think in the opening remarks, we mentioned 83 4-mile wells that we've drilled year to date. If you look back and you look at all the Permian-producing wells since 2020, anything above 3 miles or longer, we have 1,200 wells. I think our nearest competitor is around 400, and you would have to go to the next six competitors to get to that same level of 1,200.

Speaker #2: But I think you can easily look past the expertise and the technology that's already being used in the Permian. You look at things like extended-reach laterals.

Speaker #2: I mean, we're leading the Permian in long lateral development. I think in the opening remarks we mentioned 83 four-mile wells that we've drilled year to date.

Speaker #2: But if you look back and you look at all the Permian-producing wells since 2020, anything three miles or longer, we have 1,200 wells.

Speaker #2: I think our nearest competitors around 400. And you would have to go to the next six competitors to get to that same level of 1,200.

Speaker #2: So, you look at the extended reach laterals, surfactants, AI, machine learning—all of that is contributing to very strong performance, even before we start to deploy some of these other technologies.

Neil A. Hansen: You look at the extended reach laterals, surfactants, AI machine learning, all of that is contributing to very strong performance even before we start to deploy some of these other technologies.

Neil Hansen: You look at the extended reach laterals, surfactants, AI machine learning, all of that is contributing to very strong performance even before we start to deploy some of these other technologies.

Speaker #7: That's great. Thank you. Thank you.

Devin McDermott: That's great. Thank you.

Darren Woods: Thanks, Devin.

Speaker #5: The next question comes from Doug Leggett of Wolfe Research.

Neil A. Hansen: Thank you.

Neil Hansen: Thank you.

Operator: The next question comes from Doug Leggate of Wolfe Research.

Speaker #8: Well, thanks. Good morning, everybody. Darren, I hate to beat on Guyana, but good morning. I wonder if I could come back to Guyana on a couple of clarification points, or maybe more than that, perhaps.

Doug Leggate: Thanks. Good morning, everybody. Darren, I hate to beat on Guyana, but good morning. I wonder if I could come back to Guyana on a couple of clarification points or maybe more than that, perhaps. I think there's some confusion between production entitlement and free cash flow. Maybe it's for Neil, but I wonder if you could just opine on, although your production entitlement goes down, what happens to your free cash flow? That's my first part of that. I guess I can't help but notice phase 9 is now part of the story. What is your latest thinking on gross production sustainability through the end of the decade and maybe a little beyond that? Thank you.

Speaker #8: So I think there's some confusion between production entitlement and free cash flow. Maybe it's for Neil, but I wonder if you could just opine on, although your production entitlement goes down, what happens to your free cash flow?

Speaker #8: That's my first, kind of, part of that. And then, I guess I can't help but notice Phase Nine is now part of the story.

Speaker #8: What is your latest thinking on gross production sustainability through the end of the decade, and maybe a little beyond that? Thank you.

Speaker #2: Yeah, thank you, Doug, and good morning. I'll let Neil talk a little bit about the free cash flow portion of the question. I would just say we're going through our planning process currently, which we will finalize as we get to the end of the year, and then come out and talk about it as part of our corporate plan update.

Darren Woods: Thank you, Doug, and good morning. I'll let Neil talk a little bit about the free cash flow portion of the question. I would just say, we're going through our plan process currently, which we will finalize as we get to the end of the year and then come out and talk about it as part of our corporate plan update. As part of that, every year we revisit to, what are the opportunities, what progress have we made, how has our thinking developed. Indeed, one of the things that we now see an opportunity for is this ninth FPSO, and really take advantage of what we've done with Longtail to replicate that and get some significant capital advantages to apply. Our view is that's looking promising. We haven't finalized that obviously, but we're progressing it, and it looks pretty attractive at this stage.

Speaker #2: And as part of that, every year we revisit what are the opportunities, what progress have we made, how has our thinking developed. And indeed, one of the things that we now see an opportunity for is this ninth FPSO.

Speaker #2: And really take advantage of what we've done with long tail, to replicate that and get some significant capital advantages to apply. And so our view is that's looking promising.

Speaker #2: We haven't finalized that, obviously, but we're progressing and it looks pretty attractive at this stage. I think, longer term, we've got more work to do.

Darren Woods: I think longer term, we've got more work to do. As I mentioned in responding to one of the earlier questions, there's a lot of acreage yet to fully take advantage of, we're continuing exploration, continuing to look for opportunities. I mentioned that with some of the AI tools that we've trained with what we've already found and the drilling we've done, we have seen some new opportunities to explore that we hadn't previously identified. I would tell you this thing, the tape hasn't run out on this play yet, and we're going to continue to evaluate that and see what we can get from it. You can rest assured the organization is very focused on maximizing the value of that acreage for the benefit, obviously, of ExxonMobil, but more importantly for Guyana, government of Guyana, people of Guyana.

Speaker #2: As I mentioned, this is in response to one of the earlier questions. There's still a lot of acreage yet to be fully taken advantage of.

Speaker #2: And so we're continuing the exploration, continuing to look for opportunities. I mentioned that with some of the AI tools that we've trained, with what we've already found in the drilling we've done.

Speaker #2: We've seen some new opportunities to explore that we hadn't previously identified. So I would tell you this: the tape hasn't run out on this play yet.

Speaker #2: And we're going to continue to evaluate that and see what we can get from it. But, I mean, you can rest assured the organization is very focused on maximizing the value of that acreage for the benefit, obviously, of ExxonMobil, but more importantly for Guyana, the government of Guyana, and the people of Guyana.

Speaker #2: But I'll let Neil talk a little bit about the free cash flow question.

Darren Woods: I'll let Neil talk a little bit about the free cash flow.

Speaker #3: Yeah, let me try to answer your question, Doug. So again, as we mentioned, at this point we've fully recovered the $55 billion of investment, along with all the operating costs.

Neil A. Hansen: Yeah, let me try to answer your question, Doug. Again, as we mentioned, at this point, we've fully recovered the $55 billion of investment along with all the operating costs. The way the contractor agreement works is we can recover that investment up to 75%. After that, the remaining production is shared 50/50 between us and the government of Guyana. If you think about if you just stop today and there's no additional investment, then more of your production and revenue is going to flow towards cash flow, again, shared between us and the government of Guyana. The reality is we have more investment. To the extent we have the investment come in and operating costs, it'll still go into the cost bank.

Neil Hansen: Yeah, let me try to answer your question, Doug. Again, as we mentioned, at this point, we've fully recovered the $55 billion of investment along with all the operating costs. The way the contractor agreement works is we can recover that investment up to 75%. After that, the remaining production is shared 50/50 between us and the government of Guyana. If you think about if you just stop today and there's no additional investment, then more of your production and revenue is going to flow towards cash flow, again, shared between us and the government of Guyana. The reality is we have more investment. To the extent we have the investment come in and operating costs, it'll still go into the cost bank.

Speaker #3: And the way the contractor agreement works is we can recover that investment up to 75%. After that, the remaining production is shared 50/50 between us and the government of Guyana.

Speaker #3: And so, if you think about it, if you just stop today and there's no additional investment, then more of your production and revenue is going to flow towards cash flow.

Speaker #3: Again, shared between us and the government of Guyana. The reality is, as we have more investment—insofar as we have investment come in and operating costs—it'll still go into the cost bank.

Speaker #3: We'll still recover that at that 75% cap, but there's much less investment to recover. And given the level of production that we're at, you're unlikely to see that cost bank, obviously, be full again.

Neil A. Hansen: We'll still recover that at that 75% cap, there's much less investment to recover, and given the level of production that we're at, you're unlikely to see that cost bank obviously be full again. You'll just have more cash flow above your investment and above the operating cost. Now, that obviously is a question of what you think price is going to do going forward in addition to the investment and cost that we'll be putting into the cost bank. Hopefully that helps. We would anticipate, and I think we showed that in the slides, that now that we've reached full recovery of that significant investment, more of our revenues will go towards cash flow, free cash flow versus recovering cost and investment. Hopefully, that helps, Doug.

Neil Hansen: We'll still recover that at that 75% cap, there's much less investment to recover, and given the level of production that we're at, you're unlikely to see that cost bank obviously be full again. You'll just have more cash flow above your investment and above the operating cost. Now, that obviously is a question of what you think price is going to do going forward in addition to the investment and cost that we'll be putting into the cost bank. Hopefully that helps. We would anticipate, and I think we showed that in the slides, that now that we've reached full recovery of that significant investment, more of our revenues will go towards cash flow, free cash flow versus recovering cost and investment. Hopefully, that helps, Doug.

Speaker #3: And so you'll just have more cash flow above your investment and above the operating costs. Now, that obviously is a question of what you think price is going to do going forward, in addition to the investment and cost that will be put into the cost bank.

Speaker #3: So, hopefully that helps. But we would anticipate, and I think we showed that in the slides, that now that we've reached full recovery of that significant investment, more of our revenues will go towards cash flow—free cash flow—versus recovering cost and investment.

Speaker #3: Hopefully that helps, Doug.

Speaker #8: So Neil, just to be clear, so is it fair to characterize this as an inflection in free cash flow then as opposed to a decline in production entitlement?

Doug Leggate: Neil, just to be clear, is it fair to characterize this as an inflection in free cash flow then, as opposed to a decline in production entitlement? Is that a reasonable way to think?

Speaker #8: Is that a reasonable way to frame it?

Speaker #2: It's very much an inflection into free cash flow. Absolutely. And this for us, Doug, and I assume for you as well, this is about value.

Neil A. Hansen: It's very much an inflection into free cash flow. Absolutely. This for us, Doug, and I assume for you as well, this is about value. It's not about volume, right? Even though there's a slight decline in the entitled volume, the focus we have is on the value that we've created for ourselves and for the government of Guyana. At this point, there's an inflection to where you're going to see a much larger amount of free cash flow come in.

Neil Hansen: It's very much an inflection into free cash flow. Absolutely. This for us, Doug, and I assume for you as well, this is about value. It's not about volume, right? Even though there's a slight decline in the entitled volume, the focus we have is on the value that we've created for ourselves and for the government of Guyana. At this point, there's an inflection to where you're going to see a much larger amount of free cash flow come in.

Speaker #2: It's not about volume, right? Even though there's a slight decline in the entitled volume, the focus we have is on the value that we've created for ourselves and for the government of Guyana.

Speaker #2: And at this point, there's an inflection to where you're going to see a much larger amount of free cash flow come in. It is a very positive yeah, it's a very positive exciting story.

Doug Leggate: That's perfect. Thank you.

Neil A. Hansen: It is a very positive, exciting story.

Neil Hansen: It is a very positive, exciting story.

Darren Woods: Thanks, Doug.

Speaker #2: Thanks, Doug.

Speaker #5: The next question comes from Betty Jang of Barclays.

Operator: The next question comes from Betty Jiang of Barclays.

Speaker #6: Hi, good morning. We’re seeing an increasing number of resource-rich governments looking for partners to accelerate the development of their resources. And as Neil said earlier, Exxon’s track record really positions you guys as a partner of choice.

Betty Jiang: Hi, good morning. We're seeing an increasing number of resource-rich governments looking for partners to accelerate the development of their resources. As Neil said earlier, Exxon's track record just really position you guys as a partner of choice. These are large scale, long duration resources, but can also come with different set of risk. How do you evaluate these opportunities for Exxon and their competitiveness relative to what you already have in the portfolio?

Speaker #6: I imagine these are large-scale, long-duration resources, but they can also come with a different set of risks. How do you evaluate these opportunities for Exxon, and their competitiveness relative to what you already have in the portfolio?

Speaker #2: Sure. Good morning, Betty. I'll take that and then see if Neil wants to add anything to it. So I'd come back to the fundamental investment thesis that we have across all of our businesses is the projects that we pursue and ultimately advanced have to have an advantage versus what others in the industry can do.

Darren Woods: Sure. Good morning, Betty. I'll take that and then see if Neil wants to add anything to it. I'd come back to the fundamental investment thesis that we have across all of our businesses is the projects that we pursue and ultimately advanced have to have an advantage versus what others in the industry can do. We have to be able to drive the cost of supply to the far left of the cost curve so that the supply cost curve, so that we know irrespective of where the market goes and the ups and downs and prices and margins, that we'll have investments that generate above industry returns. That's been the philosophy across every business that we have and all the projects that we evaluate. The results of that are manifesting themselves today and all the investments we made over the last 10 years.

Speaker #2: It has to we have to be able to drive the cost of supply to the far left of the cost curve so that the supply cost curve so that we know irrespective of where the market goes and the ups and downs and prices and margins, that we'll have investments that generate above industry returns.

Speaker #2: And that's been the philosophy across every business that we have and all the projects that we evaluate. And the results of that are manifesting themselves today in all the investments we made over the last 10 years.

Speaker #2: That's not going to change going forward. And so I'd say first and foremost, as we look at new opportunities, you got to clear that hurdle.

Darren Woods: That's not going to change going forward. I'd say first and foremost, as we look at new opportunities, you got to clear that hurdle. Do we bring an advantage? Do we end up with a project that's advantage versus the rest of the industry? Is it at a very low cost of supply and therefore generate above industry returns? I think that's the criteria that all of our businesses are driving towards. Then, of course, when it comes to specific areas and the risk, country risk associated with those areas, the market tends to decide that. Our view is we will generate projects that realize the risk premium associated with any projects in some of those areas consistent with the rest of the market, and then we'll add to that with our advantages.

Speaker #2: Do we bring an advantage? Do we end up with a project that's advantaged versus the rest of industry? And is it at a very low cost of supply and therefore generates above-industry returns?

Speaker #2: And I think that's the criteria that all of our businesses are driving towards. And then, of course, when it comes to specific areas and risk, country risk associated with those areas, the market tends to decide that.

Speaker #2: And so our view is we will generate projects that realize the risk premium associated with any projects and some of those areas consistent with the rest of the market.

Speaker #2: And then we'll add to that with our advantages. The final step is making sure that we manage that risk in the portfolio.

Darren Woods: The final step is making sure that we manage that risk in the portfolio. One of the advantages of being large and having a very diversified portfolio is we can diversify out a specific risk. We don't have to bet the farm on any one location or any one place, and we keep a very close eye on the overall exposure of the portfolio and look at how that's developing. As we make investments, is that portfolio risk changing significantly or not? That's how we do it. What we've seen today, you see it today with some of the disruption in the Middle East. You saw it several years back with the Russia disruptions, that the portfolio is robust to some of these unexpected events, and that's how we'll manage it.

Speaker #2: One of the advantages of being large and having a very diversified portfolio is that we can diversify out of specific risks. So, we don't have to bet the farm on any one location or any one place.

Speaker #2: And we keep a very close eye on the overall exposure of the portfolio and look at how that's developing. And as we make investments, is that portfolio risk changing significantly or not?

Speaker #2: So that's how we do it. What we've seen to date, you see it today with some of the disruption in the Middle East. You saw it several years back with the Russia disruptions, that the portfolio is robust to some of these unexpected events.

Speaker #2: And that's how we'll manage it.

Speaker #3: And Betty, I think you're absolutely right. I think our track record and a recognition of our capabilities certainly is leading us to being the clear partner of choice.

Neil A. Hansen: Betty, I think you're absolutely right. I think our track record and a recognition of our capabilities certainly is leading us to being the clear partner of choice. When we talk about that, you look at being in a capital-intensive business like we are, it's the ability to execute large-scale projects, leverage technology, and then operate at a very high standard and a very high level. If you look at just the ability to execute projects, we're doing about twice the number of mega projects in our nearest IOC, and we're doing it up to 20% lower project costs, and our project delivery schedules are 20% faster than industry average. I think when you look at resource owners, I think there's an absolute recognition of that capability, that track record of being able to do those three things really well.

Neil Hansen: Betty, I think you're absolutely right. I think our track record and a recognition of our capabilities certainly is leading us to being the clear partner of choice. When we talk about that, you look at being in a capital-intensive business like we are, it's the ability to execute large-scale projects, leverage technology, and then operate at a very high standard and a very high level. If you look at just the ability to execute projects, we're doing about twice the number of mega projects in our nearest IOC, and we're doing it up to 20% lower project costs, and our project delivery schedules are 20% faster than industry average. I think when you look at resource owners, I think there's an absolute recognition of that capability, that track record of being able to do those three things really well.

Speaker #3: And when we talk about that, you look at being in a capital-intensive business like we are—it's the ability to execute large-scale projects, leverage technology, and then operate at a very high standard and a very high level.

Speaker #3: And if you look at just the ability to execute projects, we're doing about twice the number of mega projects as our nearest IOC. And we're doing it at up to 20% lower project costs, and our project delivery schedules are 20% faster than the industry average.

Speaker #3: So I think it's when you look at resource owners, I think there's absolute recognition of that capability, that track record of being able to do those three things really well.

Speaker #3: And then as Darren mentioned, I mean, when we look at any opportunity, obviously we look at the terms, but more importantly is can we bring something unique and different?

Neil A. Hansen: As Darren mentioned, when we look at any opportunity, obviously, we look at the terms, more importantly, can we bring something unique and different? Can we leverage those competitive advantages to provide an outsized return for our shareholders? That's how we think about it. We are in a, I think, in a nice position with resource owners, given what we've been able to accomplish in places like Guyana.

Neil Hansen: As Darren mentioned, when we look at any opportunity, obviously, we look at the terms, more importantly, can we bring something unique and different? Can we leverage those competitive advantages to provide an outsized return for our shareholders? That's how we think about it. We are in a, I think, in a nice position with resource owners, given what we've been able to accomplish in places like Guyana.

Speaker #3: Can we leverage those competitive advantages to provide an outsized return for our shareholders? So that's kind of how we think about it. But we are in a I think in a nice position with resource owners given what we've been able to accomplish in places like Guyana.

Speaker #5: Great. Thank you.

Betty Jiang: Great. Thank you.

Speaker #2: Thank you.

Neil A. Hansen: Thank you.

Neil Hansen: Thank you.

Speaker #5: The next question comes from Bob Brackett of Bernstein Research.

Operator: The next question comes from Bob Brackett of Bernstein Research.

Speaker #7: Good morning. I'm struck by the combination of lower base volumes on the energy products side, amidst record diesel production, and that diesel production could be cyclical.

Bob Brackett: Good morning. I'm struck by the combination of lower base volumes on the energy product side amidst record diesel production. That diesel production could be cyclical, your plan around with set points or whatnot, or it could be structural, and I suspect it's structural. You all will continue to break that diesel production record over time. Sort of a quick follow-up, how did you decide around scheduled maintenance and choices around deferring scheduled maintenance and maybe grabbing opportunistically some better product prices?

Speaker #7: You're playing around with set points or whatnot, or it could be structural—and I suspect it's structural. You all will continue to break that diesel production record over time.

Speaker #7: And just a quick follow-up: How did you decide on scheduled maintenance and the choices around deferring scheduled maintenance, and maybe taking the opportunity to secure better product prices?

Speaker #2: Yeah. Good morning, Bob. I think one of the things you hit on is this drive we've had across our portfolio to continue to high-grade the bottom of the barrel, the low-value molecules into higher-value molecules.

Darren Woods: Yeah. Good morning, Bob. I think one of the things you hit on is this drive we've had across our portfolio to continue to high grade the bottom of the barrel, the low-value molecules into higher value molecules. Distillate obviously is one of the higher value, in-demand molecules that come out of our refineries. If you look at what we've been doing over the last 10 years with investments in Antwerp, investments in Rotterdam, the investments that we've made in Singapore to upgrade these low-value molecules, and as a result, get more distillate out, that is a continuing focus. In fact, we have a number of projects in development and slated for what we're doing in the Gulf Coast to continue that trend and to continue to grow distillate jet and base stock production.

Speaker #2: And distillate, obviously, is one of the higher-value, in-demand molecules that come out of our refineries. So if you look at what we've been doing over the last 10 years, with investments in Antwerp, investments in Rotterdam, and the investments that we've made in Singapore to upgrade these low-value molecules.

Speaker #2: And as a result, get more distillate out. That is continuing a continuing focus. And in fact, we have a number of projects in development and slated for what we're doing in the Gulf Coast to continue that trend and to continue to grow distillate jet and base stock productions.

Speaker #2: So, that is a clear theme, and it makes our refineries, frankly, lower-cost suppliers and higher-margin facilities, which is a clear focus. If you look at just what we've accomplished here in the last three years, our global throughput is up 11%.

Neil A. Hansen: That is a clear theme, and it makes our refineries frankly, lower-cost suppliers and higher margin facilities, which is a clear focus. If you look at just what we've accomplished here in the last three years, our global throughput is up 11% and the production of jet and diesel is up by 15%. It is reflective of the work that we've been doing. Anything to add to that, Darren?

Neil Hansen: That is a clear theme, and it makes our refineries frankly, lower-cost suppliers and higher margin facilities, which is a clear focus. If you look at just what we've accomplished here in the last three years, our global throughput is up 11% and the production of jet and diesel is up by 15%. It is reflective of the work that we've been doing. Anything to add to that, Darren?

Speaker #2: And the production of jet and diesel is up by 15%. So it is reflective of the work that we've been doing. Anything to add to that?

Darren Woods: Yeah, Bob. I'm not sure what timeframe you're looking at, but certainly, there's an impact from planned maintenance and turnarounds in the quarter. There's a number of scheduled maintenance activities that we have completed this year, and that's had an impact, obviously, on volumes. We've done everything we can certainly to consider the current refining and margin environment if we can safely defer some of that. That's certainly been part of the consideration, and I think why you're seeing such strong performance on utilization. I would just say, though, I think it's back to the benefits of the centralized organization with global operations. The turnarounds we have completed this year. What we've seen relative to last time we did a similar turnaround or in the previous cycle, we've seen a 30% improvement in cost and a 60% improvement in duration.

Speaker #3: Yeah. And Bob, I'm not sure what time frame you're looking at, but certainly there's an impact from planned maintenance and turnarounds in the quarter.

Speaker #3: And there's a number of scheduled maintenance activities that we have completed this year. And that's had an impact, obviously, on volumes. And we've done everything we can certainly to consider the current refining of margin environment if we can safely defer some of that.

Speaker #3: That's certainly been part of the consideration. And I think why you're seeing such strong performance on utilization. I would just say, though, and I think it's back to the benefits of the centralized organization with global operations.

Speaker #3: The turnarounds we have completed this year what we've seen relative to last time we did a similar turnaround or in the previous cycle. We've seen a 30% improvement in cost and a 60% improvement in duration.

Speaker #3: So harder to see, but that certainly helps us to ensure we're not leaving anything on the table in this type of environment is when we do execute those turnarounds, we're executing them at leading edge, certainly in the first quartile.

Neil A. Hansen: Harder to see, but that certainly helps us to ensure we're not leaving anything on the table in this type of environment, because when we do execute those turnarounds, we're executing them at leading edge, certainly in the first quartile.

Neil Hansen: Harder to see, but that certainly helps us to ensure we're not leaving anything on the table in this type of environment, because when we do execute those turnarounds, we're executing them at leading edge, certainly in the first quartile.

Speaker #7: Very clear. Thanks.

Darren Woods: Very good. Thanks.

Speaker #5: The next question comes from the Rosa Borgattari with RBC.

Operator: The next question comes from Biraj Borkhataria with RBC.

Speaker #6: Hi, thanks for taking my question. It's on the downstream. Darren, you've been vocal about EU policy in the past, and you've made some comments today as well.

Biraj Borkhataria: Hi. Thanks for taking my question. It's on the downstream. Darren, you've been vocal about EU policy in the past and some comments today as well. I don't want to get into the debate on that. I think we share the same view. As of yesterday, one European country approved windfall taxes effectively on the downstream. Given what's happened to oil product prices and refining margins, it seems like this will be a growing theme. You've got 850,000 barrels a day of refining between UK and Europe. I was wondering, I assume you've been in contact with the policymakers, but have you had any discussions on this topic? How likely do you think that these will be put in place? Thank you.

Speaker #6: I don't want to get into the debate on that. I think we share the same view. But as of yesterday, one European country approved windfall taxes, effectively on the downstream.

Speaker #6: And given what's happened to oil product prices and refining margins, it seems like this will be a growing theme. You've got 850,000 a day of refining between the UK and Europe.

Speaker #6: So I was wondering I assume you'd be in contact with the policymakers, but have you had any discussions on this topic? And how likely do you think that these will be put in place?

Speaker #6: Thank you.

Speaker #2: Yeah. Thank you, Baraj. I think there's a huge temptation all around the world to deflect attention to the bad policies that governments have been implementing over time.

Darren Woods: Yeah. Thank you, Biraj. I think there's a huge temptation all around the world to deflect attention to the bad policies that governments have been implementing over time and scapegoat the industry. The reality is, we saw a long time ago with the emphasis that Europe has been putting on, frankly, de-industrializing their economy and shutting down refineries, that there would come a point in time when they would be short product, and we see that today. Any time you get into an environment where demand spikes and there's a shortage of supply versus demand, and it's trying to be met, that refinery margins will rise, and those who've stayed in that business and tried to improve that business to be successful across the cycle will make money.

Speaker #2: And scapegoat the industry. And the reality is, we saw a long time ago with the emphasis that Europe has been putting on, frankly, deindustrializing their economy and shutting down refineries, that there would come a point in time when they would be short product, and we see that today.

Speaker #2: And so anytime you get into an environment where demand spikes and there's a shortage of supply versus demand and it's trying to be met, that refinery margins will rise and those who've stayed in that business and tried to improve that business to be successful across the cycle will make money.

Speaker #2: Penalizing the businesses who've stood by those countries and provided that product going forward is very shortsighted. And leads us from the past windfall profit tax to invest even less.

Darren Woods: Penalizing the businesses who've stood by those countries and provided that product going forward is very shortsighted and leads us from the past windfall profits tax to invest even less. We canceled investments that we had planned for Europe based on the last time they passed a windfall profits tax. In fact, we're suing the EU because we don't think that's a legal taking for the industry. I think the discussions I've been having with many of the leaders there recognize the problem with that approach and the consequences, the unintended consequences of that approach. They're sensitive to it. I'm not sure that's going to keep them from trying to address concerns of their base. We'll have to see if any of that actually manifests itself in real policy and regulation.

Speaker #2: So, we canceled investments that we had planned for Europe based on the last time they passed a windfall profits tax. And, in fact, we're suing the EU because we don't think that's a legal taking for the industry.

Speaker #2: I think the discussions I've been having with many of the leaders there recognize the problem with that approach and the consequences, the unintended consequences of that approach.

Speaker #2: So they're sensitive to it. I'm not sure that's going to keep them from trying to address concerns of their base. But we'll have to see if any of that actually manifests itself in real policy and regulation.

Speaker #2: If it is, it's just another great example of misguided policy that ultimately is going to inflict higher costs and lower standards of living on their population.

Darren Woods: If it is, it's just another great example of misguided policy that ultimately is going to inflict more higher cost and lower standards of living on their population. I hope at some point in time that the European population wakes up to the very poor policy decisions being made there.

Speaker #2: And I hope at some point in time that the European population wakes up to the very poor policy decisions being made there.

Speaker #6: Very fair. Understood. Thank you.

Biraj Borkhataria: Very fair. Understood. Thank you.

Speaker #2: Thank you.

Darren Woods: Thank you.

Speaker #5: The next question comes from Jean Anne Salisbury with Bank of America.

Operator: The next question comes from Jean-Anne Salisbury with Bank of America.

Speaker #8: Hi, good morning. There are many gas pipelines coming online in the Permian starting now. A lot of investors, including us, think that it could lead to a shift to materially more gas and NGL growth out of the Permian, as operators are no longer making decisions around constraining their gas-to-oil ratio.

Jean Ann Salisbury: Hi. Good morning. There are many gas pipelines coming on in the Permian starting now. A lot of investors, including us, think that it could lead to a shift to materially more gas and NGL growth out of the Permian, as operators are no longer making decisions around constraining their gas-to-oil ratio. As the largest operator in the Permian, do you anticipate your gas volumes or gas-to-oil ratio in the Permian will inflect as a result of the new pipes?

Speaker #8: As the largest operator in the Permian, do you anticipate your gas volumes or gas-to-oil ratio in the Permian will inflect as a result of the new pipes?

Speaker #2: Good morning, Jean Anne. We have a very similar assessment as you do with respect to the balances on the piping, and that market will now clear. We won't see the disconnects that we've historically seen.

Darren Woods: Good morning, Jean-Anne. We have a very similar assessment as you do with respect to the balances on the piping, and that market will now clear, and we won't see the disconnects that we've historically seen. My sense of things is, and I can't speak for the entire industry, but as we're developing wells, we're looking at the economics, and there's a clear incentive to have higher oil production. I think that's been, I'd say, a general trend within the industry. As you look at economically maximizing the value of every well, you want more oil and less gas, given the constraints in the gas market. I think that's not going to change. My sense would be you get more into if you've got the takeaway capacity, it just opens up your ability to produce more oil, and the gas then comes with it.

Speaker #2: I don't—my sense of things is, and I can't speak for the entire industry, but as we're developing wells, we're looking at the economics, and there's a clear incentive to have higher oil production.

Speaker #2: I think that's been, I'd say, a general trend within the industry as you look at economically maximizing the value of every well. You want more oil, less gas.

Speaker #2: Given the constraints in the gas market, I think that's not going to change. My sense would be, you get more into—if you've got takeaway capacity, it just opens up your ability to produce more oil.

Speaker #2: And the gas then comes with it. And so we may see some additional gas come onto the marketplace associated with that. But the real driver will be unconstrained takeaway capacity and maximizing oil production.

Darren Woods: We may see some additional gas come onto the marketplace associated with that. The real driver will be unconstrained takeaway capacity and maximizing oil production.

Speaker #8: That makes sense. Thank you.

Darren Woods: That makes sense. Thank you.

Jean Ann Salisbury: That makes sense. Thank you.

Speaker #2: You bet. Thank you.

Darren Woods: You bet. Thank you.

Speaker #5: The next question comes from Jason Gableman of TD Cowen.

Operator: The next question comes from Jason Gabelman of TD Cowen.

Speaker #9: Hey, morning. Thanks for taking my question. I wanted to go back to the Middle East footprint, and specifically on the LNG side. I think you have over two-thirds of your LNG portfolio primarily in Qatar.

Jason Gabelman: Hey, morning. Thanks for taking my question. I wanted to go back to the Middle East footprint, specifically on the LNG side. I think you have over two-thirds of your LNG portfolio primarily in Qatar. As you assess the changing risk profile in that region, are you looking to either accelerate LNG projects into your queue to help diversify away from the Middle East? Are you evaluating more closely external opportunities, or do you feel pretty comfortable with your LNG risk exposure? Thanks.

Speaker #9: And as you assess the changing risk profile in that region, are you looking to either accelerate LNG projects in your queue to help diversify away from the Middle East?

Speaker #9: Are you evaluating more closely external opportunities or do you feel pretty comfortable with your LNG risk exposure? Thanks.

Speaker #2: Yeah. Thank you, Jason. I guess I'd start by just saying we're not extrapolating current events to kind of a long-term change in the stability of the region.

Darren Woods: Yeah. Thank you, Jason. I guess I'd start by just saying we're not extrapolating current events to a kind of a long-term change in the stability of the region. As I said earlier in the call, ultimately the world has to resolve the conflict there and get to a stable situation where those critical resources in the region find a way to the market in a reliable way. I think ultimately, there's a solution that the world will arrive at. I couldn't tell you exactly when or what it's going to look like, but those resources are just too critical to the overall economic health of the world for them to stay offline or for them to be unstable. I would say that's generally how we think about it.

Speaker #2: As I said earlier in the call, ultimately the world has to resolve the conflict there. And get to a stable situation where those critical resources in the region find a way to the market in a reliable way.

Speaker #2: And so, I think ultimately there's a solution that the world will arrive at. I couldn't tell you exactly when or what it's going to look like, but those resources are just too critical to the overall economic health of the world for them to stay offline or for them to be unstable.

Speaker #2: And so I would say that's generally how we think about it. If you look at our portfolio of opportunities in LNG, it is, through the opportunity set that we have, diversifying our production away from the Middle East, just based on where the opportunity set is.

Darren Woods: If you look at our portfolio of opportunities in LNG, it has, through the opportunity set that we have, diversifying our production away from the Middle East just based on where the opportunity set is. Mozambique, we hope to FID that project later this year. We've got Papua and Papua New Guinea that we look to FID later this year. Got Golden Pass coming on. I think continue to see opportunities and very large opportunities that are on the left-hand side of the cost of supply curve coming online. That's going to achieve some diversification. I would also tell you that as we continue to look for future opportunities, given the important role that natural gas is going to play, we won't shy away from the region.

Speaker #2: And so Mozambique, we hope to FID that project—excuse me—later this year. We've got Papua and Papua New Guinea that we look to FID later this year.

Speaker #2: Got Golden Pass coming on. So I think continue to see opportunities and very large opportunities that are on the left-hand side of the cost of supply curve coming online.

Speaker #2: So that's going to achieve some diversification. But I would also tell you that as we continue to look for future opportunities, given the important role that natural gas is going to play, we won't shy away from the region.

Speaker #9: Great. Thanks for the call there, Darren.

Jason Gabelman: Great. Thanks for the color, Darren.

Speaker #2: You bet. Thank you.

Darren Woods: You bet. Thank you.

Speaker #5: The next question comes from Manav Dutta of UBS.

Operator: The next question comes from Manav Gupta of UBS.

Speaker #10: Good morning. I wanted to go a little bit into specialty products. What's the margin environment looking like? Because lubes are extremely tight right now.

Manav Gupta: Good morning. I wanted to go a little bit into specialty products. What's the margin environment looking like? Because lubes are extremely tight right now. Lubes margin are uniquely high, and you do have a strong base stocks business, also wanted to understand how Mobil 1 is tracking and any further updates you can give us on Proxima, how the traction with new clients is going on Proxima. Thank you.

Speaker #10: Lube's margins are uniquely high, and you do have a strong base stocks business. And then I also wanted to understand how Mobil 1 is tracking, and if there are any further updates you can give us on Proxima—how the traction with new clients is going on Proxima.

Speaker #10: Thank you.

Speaker #2: Sure. Thank you, Manav. Well, I'd say specialty business is no different than any other sector business that we have, which is significant supply disruptions, significant challenges.

Darren Woods: Sure. Thank you, Manav. Well, I'd say the specialty business is no different than any other sector business that we have, which is significant supply disruptions, significant challenges with meeting the base demand. Basestock is clearly where it starts, particularly given the importance of Middle Eastern crude with respect to basestock production. One of the advantages that we've had is with the investments that we've made both in Singapore and in Rotterdam, synthetic basestocks that we can make open up the crude slate and give us opportunities to make basestocks with less dependence on Middle East crudes versus some of the more traditional extraction methods. I think we're more robust to that disruption, but clearly the market is tight.

Speaker #2: With meeting the base demand and base stock is clearly where it starts, particularly given the importance of Middle Eastern crude with respect to base stock production.

Speaker #2: And so, one of the advantages that we've had is, with the investments that we've made both in Singapore and in Rotterdam, the synthetic base stocks that we can make open up the crude slate and give us opportunities to make base stocks with less dependence on Middle East crudes, versus some of the more traditional extraction methods.

Speaker #2: So I think we're more robust to that disruption, but clearly the market is tight. We're leaning in as hard as we can with respect to base stock production.

Darren Woods: We're leaning in as hard as we can with respect to basestock production, and we're seeing the benefits of that with the high earnings that we've made in specialty products. We're also quite advantaged with respect to the value chain that we participate in and being part of basestocks. Obviously, running the refineries, running the basestock productions, running that basestock marketing business down to finished lubes, coupled with the technology organization that we have, a lot of work the organization's been doing around reformulating to find ways with the available molecules that are out there to meet customer demand, and we've been very successful with that. That ability to respond to the constraints and the challenges and find better ways to continue to meet customer demand is paying off as well.

Speaker #2: And we're seeing the benefits of that with the high earnings that we've made in specialty products. We're also quite advantaged with respect to the value chain that we participate in and being part of base stocks.

Speaker #2: Obviously, we’re in the refineries. Running a base stock production is running that base stock marketing business down to finished lubes. Coupled with the technology organization that we have, a lot of work the organization has been doing around reformulating to find ways, with the available molecules that are out there, to meet customer demand—and we’ve been very successful with that.

Speaker #2: So, that ability to respond to the constraints and the challenges, and to find better ways to continue to meet customer demand, is paying off as well.

Speaker #2: And so I think we see the business that we've established there, and our participation along that entire value chain, really paying off this quarter. Our expectation is that as that street remains constrained, we'll continue to see a big benefit in our specialty businesses from having that integrated approach to running that business.

Darren Woods: I think we see the business that we've established there and our participation along that entire value chain really paying off this quarter. Our expectation is as that strait remains constrained, we'll continue to see a big benefit in our specialty businesses for having that integrated approach to running that business. With respect to Proxima, I would just say we're progressing the investments to expand capacity. Like what we're seeing there, the size of that market is huge, and all the applications that we've been testing and the work we've been doing continues to demonstrate a very high value and use for our customer base. We've got the 35,000 KT expansion, 35 KTA expansion has come online, and then we've FID the next large step in our Proxima blending plant earlier this year. We see a big opportunity.

Speaker #2: With respect to Proxima, I would just say we're progressing the investments to expand capacity. We like what we're seeing there—the size of that market is huge.

Speaker #2: And all the applications that we've been testing, and the work we've been doing, continue to demonstrate a very high value and use for our customer base.

Speaker #2: So we've got the 35,000 KT expansion 35 KTA expansion that's come online. And then we've FID the next large step in our Proxima blending plant earlier this year.

Speaker #2: And so we see a big opportunity. It'll take time to kind of realize that opportunity because you're obviously starting a brand new market, a brand new product for some very attractive markets. But we see, again, the customer feedback says there's high demand for that, and it'll just take time to penetrate.

Darren Woods: It'll take time to realize that opportunity because you're obviously starting a brand new market, a brand new product for some very attractive markets. We see, again, the customer feedback says there's high demand for that, and it'll just take time to penetrate, but we see a long-term attractive potential here. Maybe just go back to specialty products. I think for the reasons cited, the investments that we've made, including the Singapore Resid Upgrade Project in Singapore last year, which allows us to continue to grow high-value products. For that business, specialty products, it was a record earnings for the quarter, and it's also record earnings for the H1 of this year. Again, that just demonstrates prices certainly were supportive, but it's all about those advantaged investments we're making. The focus on growing high-value products is clearly yielding very strong results for specialty.

Speaker #2: But we see a long-term attractive potential here.

Speaker #3: And maybe just go back to specialty products. I think, for the reasons—side of the investments that we've made, including the resid upgrade project in Singapore last year, which allows us to continue to grow high-value products for that business, specialty products—it was a record earnings.

Speaker #3: For the quarter, and it's also record earnings for the first half of this year. And so, again, that just demonstrates prices certainly were supportive, but it's all about those advantaged investments we're making. The focus on growing high-value products is clearly yielding very strong results for specialty.

Speaker #5: Thank you so much.

Manav Gupta: Thank you so much.

Speaker #2: Thank you.

Darren Woods: Thank you.

Speaker #5: The next question comes from Sam Margolin of Wells Fargo.

Operator: The next question comes from Sam Margolin of Wells Fargo.

Speaker #9: Good morning. Thanks for the question. This is on the structural cost savings you've made tremendous progress, but you have been fighting inflation and it looks like there's some environmental drivers that are potentially adding some more friction.

Sam Margolin: Good morning. Thanks for the question. On the structural cost savings, you've made tremendous progress, but you have been fighting inflation. It looks like there's some environmental drivers that are potentially adding some more friction. Can you talk a little bit about the way that the mix shift in your portfolio and the development of major projects in the life cycle that you're at today might influence this cost out progress? It feels like as you enter these new phases, a free cash flow sort of oriented phase in Guyana, you bring on fewer developments at a time simultaneously, there may be some levers to offset the inflation impact, in any case, would just love your thoughts on that whole trend. Thank you.

Speaker #9: Can you talk a little bit about the way that the mix shift in your portfolio and the development of major projects, and the life cycle that you're at today, might influence this cost-out progress?

Speaker #9: It feels like, as you enter these new phases of free cash flow-oriented operations in Guyana, and you bring on fewer developments at a time simultaneously.

Speaker #9: There may be some levers to offset the inflation impact, but in any case, I would just love your thoughts on that whole trend. Thank you.

Speaker #3: Yeah, sure. Thanks, Sam. Thanks for the question, and good morning. I would just say, maybe just step back and talk a little bit about the philosophy that we started back in 2018, which was we knew we wanted to grow the business.

Darren Woods: Yeah, sure. Thanks, Sam. Thanks for the question, good morning. I would just say, maybe just step back and talk a little bit about the philosophy that we started back in 2018, which was, we knew we wanted to grow the business, we wanted to make these investments, recognized that as we did that as you start new facilities, bring new projects online, that you incur more operating expense. As you develop new products to go into new markets, you're spending money on R&D and basically incurring more operating expense.

Speaker #3: We wanted to make these investments. And recognize that as we did that, that as you start new facilities, bring new projects online that you incur more operating expense.

Speaker #3: And as you develop new products to go into new markets here, spending money on R&D and basically incurring more operating expense. So, we recognize the path to growth meant additional operating expenses, and the challenge that we gave ourselves and the organization was to recognize that we needed to do that to grow earnings and cash flow, but that we had to find a way to offset that cost.

Darren Woods: We recognized the path to growth meant additional operating expenses, the challenge that we gave ourselves in the organization was to recognizing we needed to do that to grow earnings and cash flow, that we had to find a way to offset that cost, we weren't going to let our expenses rise, the only way to do that is start figuring out structural cost savings and driving structural cost out of the business to make room for the additional spend that we knew would come for doing high-value, accretive projects and product development. That's exactly what we've been doing. The cost savings have come, I'd say, primarily through the transformation we've been driving into the business and creating the value chain, giving organizations a clearer line of sight and more direct accountability for end-to-end profitability.

Speaker #3: And we weren't going to let our expenses rise, and the only way to do that is to start figuring out structural cost savings and driving structural cost out of the business to make room for the additional spend that we knew would come for doing high-value accretive projects and product development.

Speaker #3: And that's exactly what we've been doing. And so the cost savings have come, I'd say, primarily through the transformation we've been driving into the business and creating the value chain—giving organizations a clearer line of sight and more direct accountability for end-to-end profitability.

Speaker #3: That puts a very high focus on operating expenses, to synergies that we're capturing through the consolidations that we're making, and the centralized organizations are driving huge value and cost reductions.

Darren Woods: That puts a very high focus on operating expenses. The synergies that we're capturing through the consolidations that we're making in the centralized organizations are driving huge value and cost reductions. I would tell you, we just announced on 1 July the formation or the completion of our global operations organization, where for the first time in the company's history, we have all of our operations in one organization, which again, will open up opportunities to identify efficiencies that have been implemented in some parts of our portfolio but haven't been spread across the whole. We've got a long ways to go on, I think, structural efficiencies, and that's not even bringing into account the ERP system that we're developing, which I think again, will unlock a lot of opportunities.

Speaker #3: And I would tell you, we just announced on July 1st the formation—or the completion—of our global operations organization, where, for the first time in the company's history, we have all of our operations in one organization. Which, again, will open up opportunities to identify efficiencies that have been implemented in some parts of our portfolio but haven't been spread across the whole.

Speaker #3: So we've got a long way to go on, I think, structural efficiencies, and that's not even bringing into account the ERP system that we're developing, which I think again will unlock a lot of opportunities.

Speaker #3: So, our job is to keep driving down these structural costs to make room for the additional expense that comes from growth. We don't, frankly, limit our growth or the projects that we pursue based on trying to meet an artificial overall cost target.

Darren Woods: Our job is to keep driving down these structural costs to make room for the additional expense that comes from growth. We don't limit, frankly, our growth or the projects that we pursue based on trying to meet an artificial overall cost target. We have a very clear and separate objective on growth and a focus on cost and cost efficiency, and that continues, I think, to play out very well. In fact, I think if you look at our cash cost from last year versus this year, and ignore production taxes and energy prices, we're basically holding cash cost flat. We're basically offsetting the inflation that's out there. That's the objective here.

Speaker #3: We have a very clear and separate objective on growth, and a focus on cost and cost efficiency. And that continues, I think, to play out very well.

Speaker #3: In fact, I think if you look at our cash costs from last year versus this year, and ignore production taxes and energy prices, we're basically holding cash costs flat.

Speaker #3: So we're basically offsetting the inflation that's out there, and that's the objective here.

Speaker #2: And maybe just an additional point on that, Darren. Just to demonstrate the progress that we've made—Darren mentioned a year-over-year comparison—but if you took our cash expenses this year and just annualized it, our cash opex would look even with 2019.

Neil A. Hansen: Maybe just additional point on that, Darren, just to demonstrate the progress that we've made. Darren mentioned the year-over-year comparison, but if you took our cash expenses this year and you just annualized it, our cash OPEX would look even with 2019. Again, that's with all the growth that we've had. You mentioned the inflationary impacts, and I think it just demonstrates the hard work and the focus that we have on removing costs across the enterprise. That's regardless of the market conditions. That's regardless of how much we make in a specific quarter. It also, as Darren mentioned, demonstrates the power of the model that we have. Again, we're at $16.3 billion cumulative year to date. We plan to get to $20 billion by 2030.

Neil Hansen: Maybe just additional point on that, Darren, just to demonstrate the progress that we've made. Darren mentioned the year-over-year comparison, but if you took our cash expenses this year and you just annualized it, our cash OPEX would look even with 2019. Again, that's with all the growth that we've had. You mentioned the inflationary impacts, and I think it just demonstrates the hard work and the focus that we have on removing costs across the enterprise. That's regardless of the market conditions. That's regardless of how much we make in a specific quarter. It also, as Darren mentioned, demonstrates the power of the model that we have. Again, we're at $16.3 billion cumulative year to date. We plan to get to $20 billion by 2030.

Speaker #2: And again, that's what all the growth that we've had, you mentioned the inflationary impacts. I think it just demonstrates the hard work and the focus that we have on removing costs across the enterprise and that's regardless of the market conditions, that's regardless of how much we make in a specific quarter.

Speaker #2: And it also as Darren mentioned, demonstrates the power of the model that we have and again, we're 16.3 cumulative year to date and we plan to get to 20 billion by 2030.

Speaker #2: So again, really good progress, and it's pretty impressive to see how we've been able to offset some of the impacts that you mentioned, Sam.

Neil A. Hansen: Again, really good progress, and it's pretty impressive to see how we've been able to offset some of the impacts that you mentioned, Sam.

Neil Hansen: Again, really good progress, and it's pretty impressive to see how we've been able to offset some of the impacts that you mentioned, Sam.

Speaker #9: Thank you.

Sam Margolin: Thank you.

Speaker #5: We have time for one more question. Our final question will be from John Royal of Piper Sandler.

Operator: We have time for one more question. Our final question will be from John Royall of Piper Sandler.

Speaker #7: Good morning. Thanks for taking my question. We've seen some news flow over the past couple of months about talks of an expansion of the Kashagan project in Kazakhstan.

John Royall: Hi. Good morning. Thanks for taking my question. We've seen some news flow over the past couple of months about talks of an expansion of the Kashagan project in Kazakhstan. I was hoping maybe for some thoughts on where you are in those discussions and what a project could ultimately look like there.

Speaker #7: I was hoping maybe first for some thoughts on where you are in those discussions and what a project could ultimately look like there.

Speaker #9: Yeah, good morning, John. Thanks for the question. I would say, obviously, we think there is a huge opportunity in Kazakhstan to optimize what's been going on there and to help the government achieve its objectives of growing production and increasing the benefit of their natural resources for the Kazakh government and the people of Kazakhstan.

Darren Woods: Yeah. Good morning, John. Thanks for the question. I would say, obviously a huge opportunity, we think, in Kazakhstan to optimize what's been going on there and to help the government achieve its objectives of growing production, growing the benefit of their natural resources for the benefit of the Kazakh government and the people of Kazakhstan. We're very early in those conversations. I think many of the companies involved in the business there are engaged in discussions. We've got some hurdles to clear and some short-term issues with the government, and then continuing to look longer term around the different options available to the industry broadly and more specifically to ExxonMobil in terms of what we can bring to bear to help achieve, ultimately, the government's ambition of growing production there and growing their revenues.

Speaker #9: But Kazakhstan— we're very early in those conversations. I think many of the companies involved in the business there are engaged in discussions. We've got some hurdles to clear.

Speaker #9: And some short-term issues with the government, and then continuing to look longer term at the different options available to the industry broadly, and more specifically to ExxonMobil, in terms of what we can bring to bear to help achieve, ultimately, the government's ambition of growing production there and growing their revenues.

Speaker #9: But I would say we're too early in that process to give you much detail on that.

Darren Woods: I would say we're too early in that process to give you much detail on that.

John Royall: Okay. Thank you.

Speaker #7: Thank you.

Speaker #9: You bet.

Darren Woods: You bet.

Speaker #1: Thank you, John. And thanks, everyone, for joining this call. Thanks for your questions. We're going to post the transcript of the call to the investor section of our website by early next week.

James Chapman: Thank you, John. Thanks everyone for joining this call. Thanks for your questions. We're going to post the transcript of the call to the investor section of our website by early next week, and have a good weekend.

Jim Chapman: Thank you, John. Thanks everyone for joining this call. Thanks for your questions. We're going to post the transcript of the call to the investor section of our website by early next week, and have a good weekend.

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