Jim Chapman: Good morning, everyone. Welcome to ExxonMobil's earnings call. Today's call is being recorded. We appreciate you joining us. I am Jim Chapman, and I am 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 are meant to accompany this quarter's earnings release, which is posted in the same location. During today's presentation, we will 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. 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: Now, I will turn it over to Darren for opening remarks.
Darren Woods: Good morning, and thank you for joining us. In Q3, conflict in the Middle East continued to create uncertainty across the region and beyond, disrupting trade flows and constraining supplies of crude, diesel, gasoline, and other finished products critical to economies around the world. This lack of supply led to short markets and higher market prices. We recognize the impact high prices have on people's lives and economic growth. We always have, which is why we have been constantly focused on efficiently growing advantaged production to keep markets supplied. That focus and commitment pays off in times like this. Over the past decade, we have invested more than $200 billion. We have stayed focused on the fundamentals of demand and developing competitively advantaged projects that grow supply across the commodity cycle. That discipline has helped us build a bigger, stronger business that outperforms our competitors.
Darren Woods: Our manufacturing complex in Beaumont, Texas is a good example of that. In 2023, we completed a $2 billion expansion that added the equivalent of a medium-sized refinery. That investment paid for itself in about three years and is playing a critical role in meeting today's demand. That is just one of the many decisions we have made over the years that are helping address current market challenges, particularly in refining. We are the largest non-state-owned refiner in the world. Every day, we run about 3.6 million barrels of crude through our refineries and sell about 5.7 million barrels of gasoline, diesel, and other finished products into markets around the world. With products in short supply, our teams have done everything they can to keep prices down by maximizing production. Year to date, we have produced industry-leading volumes of diesel, roughly 1.1 million barrels per day.
Darren Woods: Global utilization of our fuels manufacturing facilities, excluding Middle East impacts, is at its highest level on record. That helped put more products into the market when they were needed most. We are continuing to make investments to help meet future demand. Our US Gulf Coast asset reconfiguration projects are expected to increase distillate yield by about 100,000 barrels per day, with the first phase already underway at Baytown. We have additional phases planned across our US manufacturing sites to increase yields of diesel, lubricants, and chemical feedstocks. Our global outlook projects that global energy demand will continue to grow through 2050, with oil and natural gas supplying more than half of the world's energy. Meeting that demand reliably will require continued investment across the industry, including in the Middle East. The value of our investments is increasing with the organizational changes we have made.
Darren Woods: This quarter, our global supply chain and trading teams moved quickly as markets shifted, securing feedstocks, redirecting molecules, and moving products where they were needed most. Since 2019, energy products unit earnings per barrel on a constant price and margin basis are up threefold. We are seeing the benefits of our investments in upstream as well. Excluding Middle East impacts, production volumes are up year over year, supported by continued growth in the Permian and Guyana. In Guyana, production from the Stabroek Block surpassed 1 billion barrels of oil just 11 years after discovery. No other major offshore development has reached that milestone as quickly. The closest took roughly 3 years longer. We expect our fifth development, Uaru, to start up in Q4. In LNG, we are continuing to strengthen our portfolio.
Darren Woods: Cumulative LNG production in PNG has now surpassed 100 million tons, with plans on track to further grow PNG production with the Papua LNG project, where we agreed to increase our working interest and assume operatorship. In Mozambique, we reached an agreement with Eni that will increase our operated interest in Rovuma LNG to 50% and exit our non-operated acreage position. Together, these developments represent a significant step forward in building an advantaged LNG portfolio. We are also continuing to build our low-carbon solutions business. We received approval for the Rose carbon storage project and began carbon capture and storage operations for Nucor, our third CCS startup for a third-party customer and second this year. Technology continues to drive performance across the business. In the Permian, we are the only operator currently using automated drilling rigs. We have 3 in operation today.
Darren Woods: In addition to significantly improving safety, they are delivering some of the strongest drilling performance in our fleet. We expect to expand their use to about 25% of our Permian fleet next year, and approximately half by 2028, helping us continue to grow US production safely and at a lower cost. Structural cost savings since 2019 are $16.9 billion, well on our way to $20 billion of cumulative savings by 2030. Our stronger earnings power was reflected in $15.4 billion of GAAP earnings and $25.7 billion of cash flow from operations this quarter. That financial strength gives us the capacity to keep investing in advantaged opportunities while returning cash to shareholders. This quarter, we invested $7 billion in the business and returned $9.4 billion to shareholders through dividends and share repurchases.
Darren Woods: Today, we announced a 4% increase in our dividend per share, marking our 44th consecutive year of annual dividend per share growth. We also announced plans to maintain share repurchases at $20 billion in 2027, assuming reasonable market conditions, reflecting our confidence in the strength of the business and our strategy to consistently grow shareholder distributions across commodity cycles. Finally, I would like to recognize a positive development in Europe. As you all know, I have been very critical of European policymakers and their ill-informed attempts to reduce emissions with impractical regulations that suffocate their economy and weaken the continent's energy security. They have done a lot of damage that their citizens will be paying for far into the future. The EU methane regulation was the most recent example. We support the objective of reducing methane emissions, and we have backed that support with action.
Darren Woods: Since 2016, we have reduced methane intensity by more than 60% and recently received gold standard recognition from the UN's Oil and Gas Methane Partnership. The problem with the methane regulation is the unachievable schedule. The EU passed the law and set a compliance date without putting in place the regulations needed to implement it. They, in effect, required companies to follow a rule book before the rules were written. The result was an unworkable compliance problem for industry. We made clear that ExxonMobil would comply with the law, and without a workable path to do so, we would stop importing into Europe. Fortunately, last week, the European Parliament voted to delay implementation by three years, giving the global industry time to implement systems to comply once the steps required to comply are defined. We are encouraged by this decision and hope it is a sign of things to come.
Darren Woods: The message is simple. Sound policy must work in practice. It should reduce emissions without sacrificing affordability, reliability, or energy security. It also should not seek to penalize companies that are meeting the critical needs of their people. Stepping back, the Q3 reinforced the strength of our strategy and the value of choices we have made over many years. The results we are delivering today were made possible by disciplined investments through the last decade. We are not done. We will continue to invest and strengthen the business, helping meet society's need for reliable, affordable energy and products while growing earnings, cash flow, and long-term value for shareholders. Thank you.
Jim Chapman: Thank you, Darren. Before we kick off Q&A, just one housekeeping item to note. Unlike the approach of the last several years, we do not plan to host a formal corporate plan update event in December. Instead, following approval of this year's plan by our board of directors, we will reaffirm key 2027 planning metrics through a press release later this quarter, and we expect to provide additional color during our Q4 earnings call in late January. We continue to be enthusiastic about our outlook and our execution against the long-term plans we have previously communicated. With that, we can move to Q&A. Throughout Q&A, references made to earnings may be related to adjusted earnings. As a reminder, we ask each participant to keep it to one question. Operator, we will ask you to please open the line for the first question.
Operator: Thank you. Today's question and answer session will be conducted electronically. If you would like to ask a question, please do so by pressing the star key followed by the digit 5 on your telephone. Our first question will come from Devin McDermott with Morgan Stanley. Your line is open. Please go ahead.
Devin McDermott: Hey, good morning. Thanks for taking my question.
Darren Woods: Morning.
Devin McDermott: Morning. I wanted to start on refining. It was really strong operational and financial results this quarter, and it looks like you are also able to optimize feedstocks to improve Asia throughput a bit in light of everything going on. I really wanted to dive in further, Darren, on some of your comments around what is next. You are one of the only companies that has materially expanded US refining capacity over the last decade with the Beaumont project that you highlighted. You have been a leader in reconfigurations. You got another one underway in the US Gulf Coast. Just looking beyond the near term, how are you thinking about the longer term outlook for refining? What does that mean for your appetite for further expansions, reconfiguration projects?
Devin McDermott: Give us some details on the specifics or steps that you are undertaking to continue to boost the profitability of that business.
Darren Woods: Sure, thanks for the question, Devin. As you know, we've been really on this journey of transforming the competitiveness of our refining circuit by investing selectively in refineries which have scale, which have an integrated portfolio of high-value products, whether it's lubricants, chemicals, high-value petroleum products. The work we've been doing is either investing to improve the yields and make them more competitive on a global cost of supply curve, or, for refineries that didn't have the scale or some of that diversified product slate, looking to find value where others see more opportunity than we do. We've been on that journey. I think we're at a stage today where the portfolio we have, we feel real good about. The organization's now been very focused on, how can we continue to high-grade our product slate and improve the yields across those refineries?
Darren Woods: That's in our traditional petroleum products, but we're also expanding the aperture and not limiting those facilities to historical products, but thinking more broadly about how can we further transform hydrogen and carbon molecules to make products that meet the needs of modern life? Some of those examples that we've been talking about more broadly are Proxxima and carbon materials. My view is we'll continue to look for ways that we can leverage existing facilities to continue to make products that have high margins, high value. In the short term, what we see is an opportunity to invest at a much lower than grassroots cost. You can think about leveraging the existing facilities and infrastructure at a site. You can bring on capacity at half the cost, roughly, of grassroots facilities.
Darren Woods: The economics work very well, and it's just a function of what technology can you bring to bear. With our now global technology organization and the focus that the organization has on growing earnings and delivering bottom-line value, we're finding more and more opportunities. Today, we're investing in Baytown. Our plans include investments in Baton Rouge and Beaumont, and that will significantly improve our production of diesel, chemical feedstocks, and lubricants. That's the path we're on.
Neil Hansen: Yeah. Devin, maybe I can provide just a little bit of context on the benefit that we're seeing from having that approach of investing based on long-term fundamentals, having the financial capacity, the capital discipline to do that. If you just look at the diesel yield that was mentioned, we're up about 3.5% higher on diesel yield compared to 2019. For this year alone, that represents another $1.5 billion of quarterly margins, or if you look at it from a year-to-date perspective, it's $3.5 billion. That approach to investing is really resulting in a more competitive, more resilient business. I think we highlighted in the slides that on a constant margin basis, those investments have improved that volume and mix, combined with lower structural costs, have tripled the underlying unit earnings of energy products since 2019.
Devin McDermott: Great results. Appreciate the thoughts. Thanks.
Darren Woods: Thank you.
Operator: Your next question will come from Neil Mehta with Goldman Sachs. Your line is open. Please go ahead.
Neil Mehta: Good morning, Darren and team. I want to spend some time on capital returns. Another dividend bump this morning, but also gave some clarity into 2027, where you fixed the buyback at around $20 billion. Just your perspective on that, and that $20 billion, is that a variable payment, or should we think of it as fixed? In other words, if oil was not $120 and oil was $60, is that still a commitment that you would be able to make?
Darren Woods: Yeah, sure. Good morning, Neil. Thanks for the question. I will start off here, and then let us see if Neil here wants to jump in with any comments. The way, you know, from the time really early on that I got into the job, we have been really focused on breaking out of this commodity cycle and chasing the cycle, but instead trying to drive a consistency across the business. That manifested itself very early on by investing counter-cyclically, which was, at the time, pretty unusual in the industry. We continue to stay very focused on that we do not want to be subject to the market forces and have to flex what we believe are foundational value pillars with capital investments based on the commodity cycle. We want to ride through those.
Darren Woods: Similarly, we want to provide a level of certainty, reliability, and shareholder distributions, and primarily manifested in a continuously growing dividend. That is something we have talked about for a long time, and our track record demonstrates our commitment to that 44 consecutive years of increasing annual dividends. Our strategy is to map a path to continue on that pace. Obviously, to do that and remain robust to bottom-of-cycle conditions, you want to be very cognizant of the dividend obligation that you create with that strategy, because from our perspective, we are not going to ever cut our dividends. So any increases we add becomes an obligation that we have got to commit through to the future. Share buybacks help us maintain that.
Darren Woods: You can think of the strategy as we continue to grow dividends, we continue to buy back shares, and we maintain a fairly consistent level of dividend obligation we think makes sense. We do that across the cycles. In the good times, when prices are high and income is high, cash generation is in high, we do not get over-exuberant and commit to things that we do not feel like we can sustain for the long term. Likewise, when times are a little tougher and you are at the bottom of the cycle, we do not pull back from that commitment and continue, and we use the balance sheet to supplement that.
Darren Woods: We think over time, that results in a more effective capital allocation strategy, one that is more consistently engaged in the marketplace with respect to buybacks, and one that satisfies our shareholders with continued growth that they can count on.
Neil Hansen: Yeah. Darren, maybe just to add, our ability to undertake that strategy and eliminate really the distribution volatility across cycles with a deliberate growth in the dividend and ratable share purchases. You are only able to do that if you have the financial capacity to do it. As we have talked about, that is something that is really important to us. We further strengthened that balance sheet this quarter, lowering net debt by more than $9 billion. Our net debt to capital is the strongest in the industry, and really stronger than any, maybe except for one large cap industrial. You have to have the financial capacity to be able to provide that certainty or less volatility in your distributions across cycles. We have talked about, it is the 44th year in a row that we have increased the dividend.
Neil Hansen: If you look back from the time that the ExxonMobil merger occurred, we have bought back $345 billion in shares. That represents, across that timeframe, which is about 27 years, an average of about $13 billion of share buybacks every single year. Again, the strategy to do that only allows you. You are only allowed to execute that strategy if you have the financial capacity to do so. If you think back to the beginning of this year, at the beginning of the year, we were actually leaning into the balance sheet a little bit to keep those distributions consistent. Of course, now, in this price and margin environment, we are building cash. That financial capacity allows you to undertake that strategy.
Neil Mehta: Thanks, Neil.
Neil Mehta: Thanks, Darren.
Operator: Your next question will come from Arun Jayaram with JPMorgan. Your line is open. Please go ahead.
Arun Jayaram: Yeah. Good morning, Darren and Neil.
Neil Hansen: Good morning.
Arun Jayaram: I was wondering if you could take a step back, good morning, and discuss your global gas strategy. You announced increasing your interest in Mozambique, and recently in Papua. I was wondering if you could just talk about those projects. Obviously, you are ramping at Golden Pass, and perhaps you could weave in just maybe a little bit of an update on Qatar, which is clearly a pillar of your natural gas portfolio.
Neil Hansen: Sure. Happy to do that, Arun. Thanks for the question. I would say, maybe just starting with the fundamental strategy and where you've seen us increase our ownership and then move into operatorship is, that is pretty fundamental from our perspective. Over the last decade, we have really concentrated on growing a capability set that essentially is the best in the industry with respect to developing projects. We have developed, I think, best in the industry technology capability, and we have established a global operating organization to continue to increase the differentiation we have in our ability to operate facilities. From my perspective, those three areas, technology, projects, and operations, are fundamental value pillars that form the foundation for everything else that we do.
Neil Hansen: In order to bring that advantage to bear and have it manifest itself in returns and bottom line results is we have got to operate facilities and bring that capability set to each of the projects and each of the operations we are involved in. So that is, I would tell you, a fundamental strategy that we are executing across the portfolio, and you are seeing that today in our LNG portfolio and some of the changes that we recently announced with respect to Papua and Rovuma. Part of that is making sure that we have a share that is large enough to warrant the dedication of resources. So that is, I would say, what you see playing out in the short term here that we have announced.
Neil Hansen: I think more longer term, we recognize the role that natural gas is going to play in powering the world far into the future, and bringing those capabilities to bear to meet that need. We are growing our natural gas and LNG portfolio, and our intention is to continue to do that. So you see continued growth. The steps that we are taking in Mozambique and Papua New Guinea are, I would say, stepping stones, and actually represent what we think are even greater opportunities in those areas to grow the gas business. So very focused on that and using our equity portfolio to then trade around the world. That is what you see kind of happening. Having supply points geographically distributed, that brings a lot of optionality and flexibility to supply the customer base. With respect to Qatar, I do not have much of an update.
Neil Hansen: I think QatarEnergy has been out very explicit about what they see happening with the damages they have had at their facilities. I would just say we continue to see Qatar as being an incredibly important source of supply for the world for LNG, that somehow, some way, that the issues in the Middle East are going to have to be resolved, and the strait is going to have to open because those resources are critically needed. We have a continuing commitment to Qatar to participate in their business and their ventures with them, and continue to find ways to maximize the value. I see that relationship going far into the future.
Arun Jayaram: Thank you.
Neil Hansen: Thank you.
Operator: Your next question will come from Bob Brackett with Bernstein. Your line is open. Please go ahead.
Bob Brackett: Good morning. Had a question around Golden Pass. Third-party data suggests it is approaching nameplate capacity on Train 1. You have Train 2 and 3 coming next year. What have you learned from Train 1, and how should we think about the pace of ramp of Train 2 and 3?
Neil Hansen: Yeah. Thank you, Bob. Good morning. You are right. We have made good progress on Train 1. Obviously, we had the challenges a while ago with the contractor that we had engaged going bankrupt. It has been a challenge to come in and take it over like we did and progress it on the schedule that we did. I think everything that we learned through that process in bringing on Train 1 and some of the challenges we have experienced in that have been learned and embedded in what we are doing with Train 2 and Train 3. We have very high expectations that as we bring those trains on, we are going to see all the benefits of working through the challenges on Train 1.
Neil Hansen: We are making good progress on Train 2. Our expectation is, we are going to basically be substantially complete by December, start the facilities commission and get that underway, and then expect to achieve mechanical completion on Train 3 in mid-2027, is kind of the timeframe that we are working on. I think our organization have really leaned into the opportunity there, and we have challenged ourselves to make sure that everything that we have learned through this challenging period with the contractors and then working with the remaining contractors and with QatarEnergy, that we take those and build them into the go-forward plans. Feel pretty good about that.
Neil Hansen: Very good. Thank you.
Neil Hansen: Thank you.
Operator: Your next question will come from Steve Richardson with Evercore. Your line is open. Please go ahead.
Steve Richardson: Hey, good morning. Darren, I was wondering if you could come back to the Lower 48. You hit your Permian guidance number earlier in the year. Production is holding in there from the outside perspective. I was wondering if you could give us a sense of what you are seeing in the program. I am assuming you are pushing forward with some of the efficiencies and some of the technologies, and your 2030 numbers haven't changed, but how should we think about the cadence of either growth or CapEx changes as we get into 2027 from the Lower 48?
Darren Woods: Yeah. Thanks, Steve. Appreciate the question. You are right, we have made good, steady progress in the Permian. We have always said that production will be a bit lumpy as we come in, and so when we talk about a year-end number, and what you have seen in this case is we have achieved that a little ahead of schedule. That is not inconsistent with, I think, our history where as the work and the wells are coming on, we are managing that. We are not real focused, as you know, on necessarily the volume target. It is really around making sure that we are executing it efficiently, deploying the capital efficiently, and then very importantly, leveraging the technology work that we have been doing to maximize the value of that development project.
Darren Woods: That has been one of the, I think, real challenges. I feel really good about the effort between the operation and the technology organization around continuing to innovate and find opportunities to deploy first-in-the-world approaches to what we are doing there in the Permian. I would tell you, the energy level in the company and the expectation of meeting the challenge that I laid out several years ago about doubling recovery, we think there is a line of sight to that. It is really a function of deploying the technology and then giving it time to manifest itself, and I think that is probably the biggest frustration is with the size of that development. As we start to feather in these technologies, see some early signs of improved productivity, it just takes time for that to manifest itself in the portfolio, given the base size of it.
Darren Woods: But we feel really good about what we are seeing, and we are early in, I would say, the demonstration of the benefits, but extremely enthusiastic with what we are seeing. I think as we get a little more time under our belt, a little more wells where that is deployed and a little more runtime on those wells where we have deployed it, we will continue to adjust what we expect to deliver based on what we are learning there. But I would say, I am very, very optimistic. Thank you.
Steve Richardson: Great. Thank you.
Operator: Your next question will come from Betty Jiang with Barclays. Your line is open. Please go ahead.
Betty Jiang: Hi. Good morning. Steve teed me up perfectly because I have a follow-up on the Permian technology discussion. I want to specifically ask about secondary recovery technologies. Just wondering if there are things that you have tested to date and how big that opportunity could be in helping you achieve that aspiration of doubling resource recovery.
Darren Woods: Yeah. Thank you, Betty. I think you touched on a really important element of meeting that objective. Yes, it will be an important part of achieving the ultimate objective. Yes, the team is working on ideas for how we can improve secondary recovery, and I think, again, in that space, are pretty enthusiastic. What I will tell you is, in order to maximize the opportunity set there, the primary recovery needs to be optimized and thought about with that in mind as well. It is not just come back around and think about it after you finish the primary. It is, you have got to think about secondary as you are developing your plans on the primary. That understanding and the interdependencies of the technologies and how we are thinking about it, we feel really, really good about.
Darren Woods: My sense is that piece of the equation will start to manifest itself further down the line, probably much more materially in the outer years beyond 2030 than what we are seeing here in the early years, which is really focused on the primary side of the equation. Absolutely critical part of what we are trying to do, and the team is very focused on that as well. Thanks for the question.
Betty Jiang: Okay, sir. Thank you.
Darren Woods: Yeah, you bet.
Operator: Your next question comes from Doug Leggate with Wolfe Research. Your line is open. Please go ahead.
Doug Leggate: Thanks. Good morning, everyone. Darren, I realize you are not going to do an update in December, but the longer-term portfolio seems like it is continuing to evolve with some of the changes you have made, specifically LNG. I wonder if you could just touch on how you see the trajectory evolving post-2030. I know it is early, but I want to be specific on Guyana, because you have had a number of additional discoveries. It looks like you are maybe lining up a ninth or a tenth boat there. Any color you can offer would be great. Thanks.
Darren Woods: Well, as usual, Doug, you are kind of right in my way of thinking with respect to going longer term. We are very clearly focused as an organization, and all the businesses and centralized organizations are clearly planning beyond the 2030 horizon, because in this business, you have got to think long term and be trying to develop discrete plans well past any horizon that I think the street cares about. We have been working those plans. We have got a pretty good line of sight to those plans beyond 2030. Frankly, the thing that we are working on is increasing the level of confidence and specificity of those opportunities before we kind of bring them out and start talking about them publicly. We are working to bring that and to get it out so people can see the things that we are planning to do beyond 2030.
Darren Woods: But your observation is the right one, which is we have got a really good portfolio of projects going to manifest itself well beyond 2030, and we are anxious to share that with you, but want to make sure that when we do, that we have got the level of confidence necessary to make those commitments. Because as you know, when we put a plan out, and within the organization and externally, I view those as commitments. That is how we think about it, and we do not want to get ahead of ourselves, but it is looking pretty promising. Your point about Guyana, I think, is a good one. We think there is still a lot of room to run. The team is working on that pretty focused, and I think, again, we will continue to bring that on. You have accused us of being conservative in the past. I share that conviction with you.
Darren Woods: That is generally my management philosophy when I am working with our teams, and it comes back to making sure that we can deliver on the commitments. So, we do not want to be forecast heroes here, but my expectation is we will do better than what we have come out and talked about, simply because as we go forward, we will learn, and we will take those learnings into what we are doing, and we will get better than what we thought. Hopefully, as we go forward, we will keep rolling those expectations out and defining those for you more clearly.
Neil Hansen: And maybe just to highlight a few other areas. Doug, you mentioned Guyana, obviously going to continue to be a contributor to that growth post-2030. We talked about Papua and Rovuma. I think another key critical driver for our growth going forward is exploration, and it is a core component of our portfolio. We are committed to it. We, I think, invested $1 billion a year over the last five years. You mentioned the discoveries in Guyana, but we have also had discoveries in Angola and Cyprus, and we continue to expand our acreage portfolio and the rights for exploration. So, I think that is going to continue to be a key part of that story post-2030.
Neil Hansen: And then if you look at the product solution side, we have talked a lot about this strategy of upgrading lower-value products into higher-value products, and that is certainly the case with the investments that we have made to produce more diesel, but it also extends to areas like graphite materials and Proxxima systems. So, those areas, again, I think will be a key part of that growth going 2030. So, it is certainly Guyana, but it is a portfolio of activities with a strong focus on the desire to continue to grow the business after 2030. And certainly excited when we get to the right point to disclose those plans with you as we go forward.
Doug Leggate: Appreciate that, guys. Thanks so much.
Neil Hansen: Thanks, Doug.
Darren Woods: Thank you.
Operator: Your next question will come from Biraj Borkhataria with RBC. Your line is open. Please go ahead.
Biraj Borkhataria: Hi there. Thanks for taking my question. I wanted to follow up on Mozambique. It was a very interesting announcement today where it looks like you are swapping the interest in the floating development for the larger onshore part, and I completely understand the rationale for that deal on both sides. I think it makes a lot of sense. Just wondering if you are still targeting an FID for Rovuma for Q4 this year, and could you just touch on the sort of remaining gating factors or anything outstanding there? Thank you.
Darren Woods: Yeah, appreciate the question, Biraj. I am glad that you see the logic behind what we are trying to do there in Rovuma. We are working with the partners and the government to advance that FID. We still very much expect to FID that here as we get through the back end of this year. That is the current plan and expectation. As you know, with all these projects, you have a number of stakeholders and a number of hurdles to clear, and the team is working with those folks to clear all those. But we are pretty optimistic that we will close it by the end of the year, and then we will get busy on execution.
Darren Woods: I do feel, again, by making that change and bringing the upstream part of that development into the portfolio and managing it as one continuous project, we are already beginning to see opportunities to improve upon the capital and make that even more efficient. So, feel really good about the changes that we have made here and the ability now today to bring the full weight, capabilities, and capacity of ExxonMobil to the full development, end-to-end development. So, I think we are going to see some benefits from that that we have yet to quantify. So, feel good about the changes that we have made there and looking forward to getting started on it. Thank you.
Biraj Borkhataria: Understood. Thank you very much, Darren.
Operator: Your next question will come from Manav Gupta with UBS. Your line is open. Please go ahead.
Manav Gupta: Good morning. You have one of the biggest global refining footprints. I am trying to understand, given all the capacity downtime that we are seeing globally, how long do you think it will take to replenish this depleted product inventory? I am trying to understand when could we see normalization of the refining cracks that are out there right now?
Darren Woods: Well, thanks for the question, Manav. As you know, it is a hard one, because there are a lot of variables impacting that frankly, I certainly do not have a line of sight on in terms of how they are going to play out. So, way we have been thinking about it is different scenarios in what could develop. But, I think the first thing that is ultimately going to have to happen is the world's capacity has to get back to where it was prior to these conflicts, and that is certainly the Strait of Hormuz opening up and the attacks on refining capacity in the region to stop and for those facilities to get repaired and then product moving out of them consistently. That is going to be a critical piece of the equation.
Darren Woods: Right now, I would say a third of the shortage out there, roughly, is just the inability to get clean products out of the Middle East and into the world markets. The impact of Ukrainians bombing Russian refineries is significant as well. Russia, we estimate and kind of see roughly about half of Russia's refining capacity has been taken offline. So, a country that used to be a net exporter of clean products is now a net importer, and so that is a material impact on the world balances. And that, I suspect, is going to take some time, ultimately, when the conflict stops, for those refineries to get rebuilt.
Darren Woods: My expectation is, and again, that is probably a little over a third of the capacity that is capable of restoring balance. My view is that is going to be a lot longer to come online, because two things have to happen: stop the hostilities and then start the repairs. The third area where there is an opportunity is, China has got capacity they could bring online and run at a little higher rate to put more exports out there. I think that is the other piece of the equation that can help bring markets back into balance. I think those are the three variables that I see. Difficult to predict any one of those, frankly. My guess would be it will take certainly well through next year before we see things getting back closer to normal, but it could be longer than that, frankly.
Neil Hansen: I think, Darren, without
Manav Gupta: Thank you so much.
Neil Hansen: Without knowing exactly how or when things will normalize, I think the one thing we are seeing is our ability to impact supply at scale. You have certainly seen that with the investments that we have made over the last decade and our ability to bring on additional supply when the world needs it. But it is also the operational excellence. I mean, the fact that we have been able to run our refineries at record utilization levels of around 84%, running our Gulf Coast refineries at crude unit utilization around 100%. Even though we do not know exactly how things will normalize and when they will come back to normal levels, what we are seeing is the organization is responding, and our ability to provide supply to society at scale, I think, is a differentiator.
Manav Gupta: Thank you so much.
Darren Woods: Thank you, Manav.
Operator: Your next question will come from Jean Ann Salisbury with Bank of America. Your line is open. Please go ahead.
Jean Ann Salisbury: Hi. Good morning. You noted in the prepared remarks that trading and optimization volumes are 4x what they were in 2019. Can you talk about whether that is mostly due to a structural strategy to build that business and maybe any specific examples that you have done there, versus 2026 being an extremely volatile year and perhaps not representative of the norm?
Darren Woods: Sure. Thanks for the question, Jean Ann. Let me maybe just start with a broader context, because I think our trading organization has, over the years, people have kind of come in and out of that asking questions. The way we look at that, for a long time, we didn't have what I would say is a typical trading organization. In 2018, as we moved the organization to value chain, so kind of coming out of that functional construct that we had where we had refining and marketing separate, but instead piecing all that together and running the business as a value chain, we recognized the opportunity to take advantage of these integrated global businesses, take advantage of the scale that we had and the breadth that we had across the world and across these integrated value chains, to use trading as a channel to optimize our assets.
Darren Woods: I think that's a really important distinction between maybe many of the trading houses out there who tend to be more taking positions on a marketplace. Our trading organization has been focused and is focused on maximizing the value of our assets. So I look at it as just another channel to market. Their job is to basically, in understanding the value chain, having a line of sight all along that value chain, we should be better informed and able to optimize and take positions and move barrels in a way that maximizes the value of the assets. That's exactly what you see happening. So rather than simply going out and taking positions or capturing arbitrage, there's, I think, a much more sophisticated approach to thinking about our footprint and how we maximize the value of that.
Darren Woods: We look at trading as a channel to market, just like we do retail and I&W and other parts of the business. So that's the context I'd ask you to think about that organization and their primary objective. That has been working very, very well, and we have slowly been growing it. That's the other thing, is we're not rushing to bring in what I would say are traditional merchant traders. We're looking to bring in people who recognize this is a unique opportunity to contribute to the value of the corporation in a unique way, with access to a very unique and advantaged portfolio. So it's a very different approach to trading, and we're finding the right kind of people who value that approach.
Darren Woods: That's been a slow growth and one that we're quite willing to take our time on to make sure we have the right capability in place. That's been happening, and what you see in terms of the volume, one, is just because that organization continues to bring people on and get bigger. My expectation is we'll continue to do that in the right way with the quality of the individuals coming in, the key kind of critical path in terms of how quickly we grow. The final point I'll make is, you can't discount the market and the size of the opportunity. So certainly, that is weighing in on the results, but I would say it's on top of that broader strategy and approach that we're taking.
Neil Hansen: Yeah, maybe just to reiterate that point. I mean, as you would imagine, those optimization capabilities are critically important, and they are more manifest when trade flows shift like we are seeing. So that global reach that we have gives us more options to secure feedstock, redirect molecules, move products where they generate the most value for society and for the corporation. So, as Darren Woods mentioned, it is a channel for us. It is an opportunity or a way for us to maximize the value of our assets and the products that we sell. It gives us the optionality and the flexibility, and it particularly is manifest when you see things like today, when those trade flows shift. But our ability to then place products where they generate the most value, where they are most needed, the ability to place feedstocks in our refineries is a true differentiator for us.
Neil Hansen: But it is, again, all around this desire to maximize the assets and the value of our fully integrated value chain.
Jean Ann Salisbury: Very clear. Thank you.
Darren Woods: Thank you.
Operator: Your next question will come from Jason Gabelman with TD Cowen. Your line is open. Please go ahead.
Jason Gabelman: Yeah. Hey, thanks for taking my questions. In the spirit of kind of exploring the portfolio beyond 2030, there has been reports both on your interest in Venezuela, which maybe has moved to the fore a bit more quickly than we had anticipated earlier in the year, and then also interest in expanding your operational footprint in Kazakhstan with the Kashagan project. So I was hoping you could just touch on your aspirations in both of those regions. Thanks.
Darren Woods: Yeah, sure. Happy to do that, Jason. I think, first of all, I would just caution everybody to take what is reported in the press with respect to Venezuela and ourselves with a little pinch of salt. I think sometimes there is some, maybe a little more exuberance than is warranted. In my mind, we are not behind or ahead of anything that I talked about going all the way back to January. We recognize, and I think that the world does, that Venezuela has a lot of resource. It is a challenged resource with respect to the qualities of that crude and the challenges of producing it. So, we absolutely see a need for that resource at some point in the future, but it is going to have to be produced and developed at a very competitive cost in order for it to compete on the world markets.
Darren Woods: That is going to require a scale and a technology capability and an operating capability that, frankly, very few companies have. We believe we have advantages in that space, and therefore, ultimately, we will have a role. But like I said earlier, it is going to require some substantial changes to the way things have historically been done in Venezuela. There is progress being made on those areas, working on fiscal regimes, working on legal regimes, working on investor protections, a number of things that are kind of in progress, but there is a way to go. And I would just tell you, we are going to make sure that before we commit, that those are in place and we have confidence that we have a viable project that is sustainable and will generate the returns required to compete in our portfolio. And I expect that to take time. So, we are working our way through it.
Darren Woods: We're not in a rush. We think that opportunities are going to be there for a while, so we're trying to be methodical and thorough, and I'd say that's how it's working. With Kazakhstan, I just think, again, another potential opportunity. I think some of the constructs of the past have introduced a lot of complexity that hasn't allowed us and the industry to effectively develop those resources. So we've left a lot of, I think, potential trapped. As these ventures kind of proceed, we think there's an opportunity to optimize that, and we're working with the partners there. We're working with the governments to see if we can't find a better win-win proposition for all the players there, including ourselves and for the government of Kazakhstan.
Darren Woods: We see a line of sight to that, but again, it'll take time to work our way through, and we've got some very constructive discussions happening today. Hopefully, those will come to fruition sometime here in the near future, but it's a work in progress.
Jason Gabelman: Darren, thanks for taking the questions, man.
Darren Woods: You bet. Thank you.
Operator: Your next question will come from Sam Margolin with Wells Fargo. Your line is open. Please go ahead.
Sam Margolin: Hello. Thanks for taking the question. I guess continuing on the theme of bringing an advantage to wherever you are, on the inorganic side, in the industry, transaction pace is picking up. Some of what's going on is probably small for you, but nevertheless, it seems fairly active. You're moving to a place where the balance sheet has a tremendous amount of capacity. Just wondering what your latest thoughts are on the capability to do something inorganic and deliver some of your proprietary edge to an asset that could stand for some improvement.
Darren Woods: Well, thank you, Sam. I agree with your thesis and the way you're thinking about it. Frankly, going all the way back when we started this effort to really focus on these core capabilities, tried to build an advantage so we can improve our own operations and organic investment opportunities, as well as inorganic ones. Our view is this lever was going to help us across the board. Frankly, as we look forward with the ambitions that we have to grow earnings and cash flow, we're going to need every lever available to us. We're going to need exploration and going out and finding new resources. We're going to need the ability to optimize the resources that we have and maximize recovery, and then we're going to need to take advantage of inorganic opportunities that are value-accretive to the portfolio.
Darren Woods: I would tell you we're actively working all aspects of that because we recognize that all aspects are going to be required. I think that opportunity is there. Obviously, it's a function of finding the right partner organization and one where you can arrive at a mutually agreed value share, but I definitely think there's something there, and we're continuing to work it. My suspicion is as we get better and better and realize the advantages, the more deal space opens up and potentially more opportunity. That's kind of, I'd say, an evolving space.
Neil Hansen: Sam, maybe, you referenced this in your question, that we bring a set of unique competitive advantages that inherently create deal space. If you just look back on the prior acquisitions we have done recently, taking, for an example, with Pioneer, we have been able to double the synergies of that acquisition from $2 billion to $4 billion a year. You look at Denbury and the acquisition of the Green Pipeline and the impact that is having on our approach to building out a CCS business. We now have, I think, 11 MTA under contract across eight customers. So, the history and the experience we have had is we have been able to demonstrate bringing those advantages, those things that we do really well, more unique than anyone, and we are able to create additional value to shareholders.
Neil Hansen: As Darren Woods mentioned, certainly a tool that we will continue to look at, but we have to be patient and find those opportunities where we can bring that value and accrete additional value for shareholders.
Sam Margolin: Thank you so much.
Darren Woods: Thank you, Sam.
Operator: Your next question will come from James West with Melius Research. Your line is open. Please go ahead.
James West: Thanks, and good morning, Darren.
Darren Woods: Morning, James.
James West: Something we've been looking into and thinking more about, and it's occurred over a longer period of time, is as ExxonMobil has evolved over the last decade or 2, you've taken much more of an operatorship or a control stake in projects. I'm assuming that's something that you've done, you've tried to do this, but you've also proven that you have that operational expertise. Curious if you could just talk about, has this been a disciplined approach? Is this the approach going forward? Is this how you're thinking about the business? Are we thinking about it correctly, that you have meaningfully increased your operatorship percentage over time?
Darren Woods: Yeah. Thanks, James. You are spot on. I think what you are observing is a reflection of the approach that we are moving towards, and we won't be able to execute it in all circumstances. But if you go back to the value thesis that we've been executing for the last decade, it's really, we are uniquely positioned with a scale that frankly none of our competitors have, and a portfolio of businesses with synergies that none of our competitors have.
Darren Woods: As we started transforming the organization and creating value chains and then centralizing these core capabilities, so think technology, projects, and operations, we are now, for the first time in the corporation's history, capable of taking all the best practices and learnings across our portfolio and in projects, whether those practices came from our traditional or historical refining projects organization or upstream projects organization or chemical projects organization, or in fact, from our technology company. Those are all now in one organization, and that organization is taking the best of the thinking that we have across the company, irrespective of what business or function it was in, and applying that to the portfolio.
Darren Woods: For projects, which was the first organization where we started that, we've seen huge benefits and improvements in bringing the best thinking of ExxonMobil across our entire portfolio together and to bring those to bear on our toughest challenges. Technology was the second core organization that we did that, and again, we are seeing the real benefits of that, where rather than organize ourselves around the company and the businesses that we've set up, instead organize ourselves around the capabilities and then apply the best capabilities to the hardest problems. I'll give you just one quick example of how that paid off.
Darren Woods: The lightweight proppant that we are now seeing deployed throughout the Permian and bringing significant value, that was refining technologists who work on cokers applying their understanding of coke morphology to a challenge in the upstream organization and coming up with a brand new proppant, a cost-effective proppant. We wouldn't have had that without technology, and we are seeing that again across all aspects of technology, and so that's bringing huge advantage. Then we just, for the first time ever in the company, established one operating organization so that people running LNG facilities are working with and collaborating with people who run refineries or traditional chemical plants, and same with our offshore platform. Today, we are seeing a great mix across that, and that learning is unique to ExxonMobil in the industry, and we see huge value from that.
Darren Woods: And then in order to realize that value, we have got to be in a position where we can bring it to bear on the projects that we are engaged with, which means we need to be an operator. In order to justify that effort and that allocation of resource, we need to be an operator with a significant share of the project. That is how we are thinking about it. We think we bring real value there, we bring value to our partners, and we bring value to the resource owners. To date, that is really beginning to demonstrate itself.
Neil Hansen: Yeah, maybe I will just add, Darren, that desire for more direct control over operations and project execution really is the direct result of the confidence we have in the organization. We have talked about the operational excellence this quarter, but you look at, Darren mentioned global projects and their performance over time, we are executing double the number of mega projects than any of our IOCs, and that performance is yielding results. They are delivering projects at 20% lower cost and 20% faster schedule time. Part of this desire to take more direct control of operations and project execution is the organization continues to perform really well in those areas.
James West: Very clear. Thanks, guys.
Darren Woods: Thank you.
Operator: We have time for one more question. Our final question comes from John Royall with Piper Sandler. Your line is open. Please go ahead.
John Royall: Hi, good morning. Thanks for taking my question. My question's on the Middle East. You guided to a 350 KBD impact unchanged in Q4. I know a lot of that is wrapped up in Qatar LNG, where you've had some damage. Can you speak to the egress side in the UAE in terms of what you've been able to get out of the strait or divert barrels elsewhere, if applicable, and just how that's evolved over the past quarter or so since the MOU ended?
Darren Woods: Sure, yeah. Thanks for the question, John. I think you're right. The impact that we're seeing from a volume standpoint is concentrated in Qatar and the loss of those trains and then the inability to flow at the rates and transport LNG at the rates we were prior to the conflict. UAE production has been back up again, essentially consistent with where we've historically been. The sales, though, have been deferred just based on the constraints. What we're seeing is, while the production's being booked, the realization of that production is delayed simply as a function of the logistics and the ability to move the barrels out. We're working to basically improve upon that. I know the UAE is very focused on developing more logistics routes to get barrels out, and we're working with them on that.
Darren Woods: Our expectation is with time, we'll start to see the sales revenue catch up with the production numbers. That today is certainly impacting us in the short term. Thanks for the question.
John Royall: Thank you.
Jim Chapman: All right. Thanks, John. Thanks, everybody, for joining this call and for your questions. We are going to post a transcript of this call to the investor section of our website by early next week. Have a good weekend.
