EXXON MOBIL CORP Q3 FY2024 earnings call

• Enterprise-wide transformation is enhancing earnings power. The Energy Products business has reduced costs by $5 billion vs 2019, with a 24% reduction in turnaround costs for Energy Products in the first half of 2024.
• Refining portfolio has been reduced from 45 refineries at Exxon-Mobil merger to 15 expected by year-end through divestments and asset optimization. Product yield has improved with investments like Rotterdam Advanced Hydrocracker and Beaumont expansion.
• Joliet Refinery recovered quickly from a tornado impact, beating recovery schedule. Diversification by geography, resource, and product mix provides earnings stability.
• Upstream business has a advantaged portfolio, with Pioneer acquisition synergies higher than expected, including long laterals in drilling. Guyana Gas-to-Energy project completed on budget and schedule.
• Low Carbon Solutions business has Baytown hydrogen project with ADNOC and Mitsubishi partnerships, and progress on CCS with multiple CO2 storage agreements.

ExxonMobil's Energy Products business had year-to-date earnings in 2024 roughly double that of the same period in 2019 on a constant margin basis. The Upstream business grew production to 4.6 million oil-equivalent barrels per day in the third quarter, a 24% increase versus the prior-year quarter. The Low Carbon Solutions business is developing a large low carbon hydrogen production facility in Baytown, with ADNOC and Mitsubishi partnering. In terms of revenue contribution, the Energy Products business is a key driver, with its earnings power significantly improved through cost reductions and asset optimization.

• Dividend increased by 4% to $0.99 per share, with 42 consecutive years of dividend increases.
• Upstream production growth expected, with LNG projects like Golden Pass delayed ~6 months to back-end 2025.
• CapEx and exploration expense guidance for 2024 at $28 billion, with $25 billion for Exxon Mobil and $3 billion for Pioneer.

• Risks associated with forward-looking statements, including uncertainties in regulations for low carbon projects.
• Market cycles affecting liquid prices, refining margins, and chemical margins.
• Execution risks for LNG projects like Golden Pass and North Field Expansion in Qatar.

Q: Hey, good morning. Thanks for taking my question. So, Darren, you had some helpful prepared remarks on the downstream business. So, I actually wanted to start there. If we look at results in the quarter, they were strong and actually looks like they came in a bit ahead of what was implied by the 8-K earnings considerations, even with that Joliet impact you discussed, and softening crack spreads in the quarter. And it looks like margin capture, volume costs were all factors here. So, I was wondering if you could just talk through some of the latest trends you're seeing across your refining footprint, the drivers of that beat versus the earnings considerations, and then, specifically, how some of the strategic projects are impacting results relative to your expectations?

A: Yes, sure, Devin. I'll start with that, and then see if Kathy wants to add anything. I think you've got to step back to the broader approach that we've established with the downstream business and its integration into the new company of Product Solutions, which is really looking at how you optimize the full value chain. That, I think, is a fundamentally different approach to how we were historically running the refining business, and looking at all the value levers to pull from bringing crude in to the refineries, all the way out to marketing the products. And I think the results that we see in that business are reflective of a collection of those efforts across the whole. In addition to a lot of the cost cutting that we've doing to reduce structural cost, and the effectiveness and improvements that we're seeing by centralizing a lot of activities and bringing the best thinking of the corporation to bear on each part of the business that we're operating. A great example in the refining business has been the centralization of the maintenance approach that we're doing, not just in turnarounds, but in our routine day-to-day maintenance. That has brought a huge amount of value and lower cost to our refineries operating around the globe by taking the best thinking across both our Upstream and downstream and chemical businesses, consolidating that into a single approach, and then effectively executing that at each of the sites is driving huge value. I think two, eliminating what was somewhat of an artificial barrier between our chemical businesses in the facility and our refining business in the facility, and making sure that the organization thinks about the whole and optimizes the whole in the disposition of each stream as it flows through those facilities is having a big impact. So just I would say the optimization of the facility and the molecules that flow through those facilities, irrespective of whether it's a product that goes into the petroleum product space or whether it goes into the chemical product space, I think has been a significant uplift. And then on top of that, I would say the thinking about the channels to market and the value uplift we can get through those channels, and bringing a trading organization along and thinking about them as a value channel to optimize across the value chain that our refineries participate is also bringing additional value in making sure that we're maximizing the value and the placement value of all the barrels that come out of the refinery, and all the products that come out of the refinery. So, there is a collection of things that have been changed over the years that are fundamentally different than how we've historically been running the business. And obviously, some of those and the benefits of those will move with the market environment and the available spreads in the market. But, generally speaking, it's a combination of a lot of things that we've been working on to drive value in that business, along with the others. Kathy, anything to add?

Q: The only that I'd add is we try pretty hard to demonstrate in the materials we provide you earnings the underlying big movers that are improving the earnings power of the company. And so, in this case, I'd say we put forward the year-to-date results more so than just the quarter because that's a bit easier then to see that coming through our results. So, if you look at our Energy Products business on a year-to-date basis, you'll see that we got about $500 million uplift from advantaged project growth, as well as cost savings, right. So, that's coming from both the Beaumont expansion as well as Permian Crude Venture, and all the structural cost savings that we're driving, not just through the Energy Products business, but obviously more broadly for the company. And then early on in the question you referenced we came in a bit better than what the Street was expecting in this area. One of the reasons we came in better was the much faster startup at Joliet. And so, we had given some guidance on what we thought that impact was going to be. And the team just did a wonderful job in restarting that facility safely and more quickly than we had expected. And that also really accrued to our bottom line.

Q: Yes, good morning, Darren, Kathy, and team. I just want to spend some time talking about the startups of the key LNG projects. And maybe you could talk about what we're seeing in terms of de-risking Golden Pass, and bringing that into service? And then we get less visibility on what's happening in Qatar, but it's going to be a big important project, North Field Expansion. So, to the extent you're able to, can you just share your perspective of how that's going on the ground?

A: Yes, good morning, Neil. Thanks for the question. I'll just say, obviously, that the Golden Pass venture is managing the project, and we're contributing as best we can, and obviously worked with the venture in response to the bankruptcy. And that team, I think, is making really good progress at re-optimizing the work and the schedule. We anticipate today that that venture will basically be delayed by about six months. So, we expect to see first LNG out of that train back-end of 2025, to potentially slipping over into the New Year, but it'll be in that timeframe that we see. And then, of course, each train after that, we anticipate about six months' separation between the trains coming on. So, think that venture has done a lot of really good work to overcome what was a pretty challenging set of circumstance. And we feel pretty good about the path that they're on. There's still more work to do, but I think a really good vector. And the fact that the existing contractors that were involved in that venture have stepped in to fill the void and pick up the baton and keep running the race I think is a huge testament to those and their commitment to the success of this project, along with all the folks at the venture who were working this real hard. So, we stay close to it, but the venture organization there really owns that and deserves the credit for the recovery there. I think on Qatar, same thing. We're a participant in there. And QatarEnergy obviously is managing those projects. But a better place for them to give status of where the projects are. We feel pretty good about the collaboration and our ability to work hand in glove with QatarEnergy, and frankly feel really good about the competitiveness of those projects, and so are fairly engaged with those, and feel good about the work that's happening in that space. And the, obviously, we're doing work in Papua, and looking to make sure we can come with an attractive project there, and looking at opportunities to advance the Mozambique project as well. So, we've got a pretty good portfolio of LNG projects that we see going into the future. And the market response that we're seeing on the potential for those projects is very positive. So, we see strong demand signals and, frankly, a lot of customer interest. So, I feel good about the LNG business as a whole. And then I think working really constructively through the projects that are in development or under construction, and then making good progress on the concepts and the engineering for the LNG projects to come.