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Exxon Mobil (XOM) Announces 2017 Capex, Growth Initiatives
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Exxon Mobil Corporation (XOM - Free Report) recently released its capital spending projection for 2017. The company expects capital spending to be at $22 billion for 2017, up 16% from the 2016 level.
Moreover, capital and exploration expenses are expected to average $25 billion annually through the end of the decade. Over 25% of the planned spending in 2017 has been apportioned for high-value, short cycle opportunities, including those in the Permian and Bakken basins. Short-cycle investments are defined as those anticipated to generate positive cash flow in less than three years after initial investment.
Exxon Mobil has an inventory of over 5,500 wells in the Permian and the Bakken with a rate of return of more than 10% at $40 a barrel, with nearly one-third generating considerably higher returns. Total annual net production growth from these basins could be as high as 750,000 oil-equivalent barrels per day through 2025 at a compound annual growth rate of about 20%.
Exxon Mobil’s position helps it to thrive in any price environment by capitalizing on the competitive strengths of its integrated businesses as well as by spending on projects that produce high-value products across the commodity cycle.
The company expects to make progress on longer-term projects focused on growing higher-value production in locations including Canada, Guyana and the United Arab Emirates. For example, two wells were established in Guyana in 2016 as a world-class discovery with recoverable resources of more than 1 billion oil-equivalent barrels. Guyana’s project is expected to be brought online by 2020, less than five years after the initial discovery well – a rare occurrence in the industry in terms of development time.
Exxon Mobil is likely to start-up five major upstream projects in 2017 and 2018, which will contribute an additional 340,000 oil-equivalent barrels per day of working-interest production capacity. Of these two projects, Odoptu Stage 2 in Far East Russia and the Hebron project in Eastern Canada are slated to be commissioned by the end of this year. Other projects scheduled for startup in the period include the Upper Zakum expansion in the United Arab Emirates, Barzan in Qatar and Kaombo in Angola.
Since 2012, the company has commissioned 27 projects, adding 1.2 million oil-equivalent barrels per day of installed capacity. The company has an upstream portfolio of about 100 projects that are in various stages of planning, concept selection and construction. These investments will sustain upstream volumes that are estimated to be in the range of 4–4.4 million oil-equivalent barrels per day through 2020.
In the downstream operations, the company is investing across the value chain to continue strengthening its portfolio of refining and other advantaged manufacturing assets. In fact, the company is reconfiguring a hydrocracker unit at its Rotterdam refinery to produce higher-value products, comprising premium lube base stocks and ultra-low sulfur diesel, by upgrading lower-value vacuum gas oil.
The chemical segment is making investments to capture advantaged feed stocks and manufacture high-performance products in the U.S. Gulf Coast region and at its Singapore complex in Asia.
Shares of the company have underperformed the Zacks categorized Oil & Gas-International Integrated industry in the last three months. During the period, Exxon Mobil shares lost 5.1%, while the broader industry registered a decrease of 1.1%.
Exxon Mobil carries a Zacks Rank #2 (Buy). Some better-ranked players in the same space include Denbury Resources Inc. , Sunrun Inc. (RUN - Free Report) and W&T Offshore Inc. (WTI - Free Report) . Both Delek Logistics Partners and Sunrun sport a Zacks Rank #1 (Strong Buy), while W&T Offshore holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Denbury Resources posted a earnings surprise of 0.00% in the preceding quarter. It had an average positive earnings surprise of 212.50% in the four trailing quarters.
Sunrun posted a positive earnings surprise of 137.21% in the preceding quarter. It beat estimates in all the four trailing quarters with an average positive earnings surprise of 134.71%.
W&T Offshore posted a positive earnings surprise of 44.19% in the preceding quarter. It beat estimates in all the four trailing quarters with an average positive earnings surprise of 31.49%.
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Exxon Mobil (XOM) Announces 2017 Capex, Growth Initiatives
Exxon Mobil Corporation (XOM - Free Report) recently released its capital spending projection for 2017. The company expects capital spending to be at $22 billion for 2017, up 16% from the 2016 level.
Moreover, capital and exploration expenses are expected to average $25 billion annually through the end of the decade. Over 25% of the planned spending in 2017 has been apportioned for high-value, short cycle opportunities, including those in the Permian and Bakken basins. Short-cycle investments are defined as those anticipated to generate positive cash flow in less than three years after initial investment.
Exxon Mobil has an inventory of over 5,500 wells in the Permian and the Bakken with a rate of return of more than 10% at $40 a barrel, with nearly one-third generating considerably higher returns. Total annual net production growth from these basins could be as high as 750,000 oil-equivalent barrels per day through 2025 at a compound annual growth rate of about 20%.
Exxon Mobil’s position helps it to thrive in any price environment by capitalizing on the competitive strengths of its integrated businesses as well as by spending on projects that produce high-value products across the commodity cycle.
The company expects to make progress on longer-term projects focused on growing higher-value production in locations including Canada, Guyana and the United Arab Emirates. For example, two wells were established in Guyana in 2016 as a world-class discovery with recoverable resources of more than 1 billion oil-equivalent barrels. Guyana’s project is expected to be brought online by 2020, less than five years after the initial discovery well – a rare occurrence in the industry in terms of development time.
Exxon Mobil is likely to start-up five major upstream projects in 2017 and 2018, which will contribute an additional 340,000 oil-equivalent barrels per day of working-interest production capacity. Of these two projects, Odoptu Stage 2 in Far East Russia and the Hebron project in Eastern Canada are slated to be commissioned by the end of this year. Other projects scheduled for startup in the period include the Upper Zakum expansion in the United Arab Emirates, Barzan in Qatar and Kaombo in Angola.
Since 2012, the company has commissioned 27 projects, adding 1.2 million oil-equivalent barrels per day of installed capacity. The company has an upstream portfolio of about 100 projects that are in various stages of planning, concept selection and construction. These investments will sustain upstream volumes that are estimated to be in the range of 4–4.4 million oil-equivalent barrels per day through 2020.
In the downstream operations, the company is investing across the value chain to continue strengthening its portfolio of refining and other advantaged manufacturing assets. In fact, the company is reconfiguring a hydrocracker unit at its Rotterdam refinery to produce higher-value products, comprising premium lube base stocks and ultra-low sulfur diesel, by upgrading lower-value vacuum gas oil.
The chemical segment is making investments to capture advantaged feed stocks and manufacture high-performance products in the U.S. Gulf Coast region and at its Singapore complex in Asia.
Shares of the company have underperformed the Zacks categorized Oil & Gas-International Integrated industry in the last three months. During the period, Exxon Mobil shares lost 5.1%, while the broader industry registered a decrease of 1.1%.
Exxon Mobil carries a Zacks Rank #2 (Buy). Some better-ranked players in the same space include Denbury Resources Inc. , Sunrun Inc. (RUN - Free Report) and W&T Offshore Inc. (WTI - Free Report) . Both Delek Logistics Partners and Sunrun sport a Zacks Rank #1 (Strong Buy), while W&T Offshore holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Denbury Resources posted a earnings surprise of 0.00% in the preceding quarter. It had an average positive earnings surprise of 212.50% in the four trailing quarters.
Sunrun posted a positive earnings surprise of 137.21% in the preceding quarter. It beat estimates in all the four trailing quarters with an average positive earnings surprise of 134.71%.
W&T Offshore posted a positive earnings surprise of 44.19% in the preceding quarter. It beat estimates in all the four trailing quarters with an average positive earnings surprise of 31.49%.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>