EXXON MOBIL CORP Q1 FY2025 earnings call

• Current market and policy environment is uncertain with tariffs weighing on economic forecasts and downward pressure on prices and margins.
• Since 2019, the company has taken $12.7 billion of structural cost out of the business, averaging almost $2.5 billion per year.
• In Q1, earnings were $7.7 billion, cash flow from operations was $13 billion. Sold $1.8 billion of assets in the quarter, with $5 billion of incremental divestments completed as of the Corporate Plan update in December.
• Commenced operations at the world scale chemical plant in China ahead of schedule and under budget. Started up the second advanced recycling unit at Baytown. Bringing on two new FPSOs at deep-water projects offshore Guyana and Brazil, expected to start up later this year.
• Proxxima business showcased a new high strength EV battery case and collaborated with a leading wind turbine manufacturer. Expect to hit multiple Proxxima milestones this year, including more than doubling production capacity.
• Distributed $9.1 billion of cash in the quarter, including $4.8 billion of share buybacks, with a three-year total shareholder return of 60%.

In the first quarter, ExxonMobil delivered earnings of $7.7 billion, up 4% sequentially excluding identified items. Cash flow from operations was $13 billion, leading all IOCs. In the upstream, the focus is on growing volumes of the most profitable barrels. For product solutions, advantage projects are accelerating the shift to a more profitable mix of products, with an aim for 80% growth of high value products by 2030, bringing them to over 40% of total product solutions earnings. In low carbon solutions, the company expects to generate $1 billion of earnings by 2030 in businesses insulated from commodity price cycles.

• Plan to improve break evens to $35 per barrel by 2027 and $30 per barrel by 2030.
• Capital allocation priorities: Invest in profitable growth, maintain financial strength, and share success with shareholders. Cash flow grows consistently through 2030. Total cash CapEx to be between $28 billion and $33 billion per year through 2030, with reinvestment rate declining from 50% to 40% of cash flow over the planned period.
• By 2030, confident of delivering $20 billion more in earnings and $30 billion more in cash assuming constant prices and margins.

• Market uncertainty due to ongoing tariffs and threats of increased OPEC supply, causing downward pressure on prices and margins.
• Policy uncertainties, such as the need for sustained policy support or market developments for certain investments.
• Potential impact of changing market conditions on the NPV of investments, requiring flexibility in the investment portfolio.

Q: Betty Jiang asked about the flexibility in the portfolio and balancing decisions with operational momentum.

A: Darren Woods responded that it's a function of market conditions, comparing current market to future expectations, factoring in momentum, costs, and contractor activities, with a rigorous process for evaluating tradeoffs.

Q: Devin McDermott inquired about how recent market developments like slowing global growth and U.S.-China tariffs impact the China chemicals project and chemicals business.

A: Darren Woods said the industry has been in a long supply position, margins are low, but ExxonMobil's focus on high-value products, reliable operations, and low cost is paying off. The China complex was built below incremental cost, started up smoothly, and expects to ramp up through the year.

Q: Doug Leggett asked about share buybacks and the status of the Golden Pass project.

A: Darren Woods said they're committed to share buybacks to address the obligation from the Pioneer acquisition, and the Golden Pass project continues to progress, expecting first LNG by the end of the year or early next year.

Q: Neil Mehta asked about M&A and portfolio gaps.

A: Darren Woods said acquisitions are considered where one plus one equals three, leveraging ExxonMobil's advantages, and they're open to opportunities in a low cost environment but not counting on them.

Q: Steve Richardson asked about the Baytown Blue Hydrogen project.

A: Darren Woods said they need policy support, customer offtake agreements, and a better carbon accounting system, with progress on discussions but waiting for offtake agreements to move forward.

Q: John Royall asked about Pioneer's synergy tracking.

A: Darren Woods said synergies are exceeding expectations, with annual average synergies expected to be higher than initially planned.

Q: Biraj Borkhataria asked about CapEx plans and the Mozambique project.

A: Darren Woods said CapEx buckets are on track, with policy uncertainties early stage, and on Mozambique, they adjust stakes based on the right-sized effort for their advantage.

Q: Jean Ann Salisbury asked about the Coke province performance.

A: Darren Woods said it's performing to expectation, with ongoing results exceeding initial expectations.

Q: Alastair Syme asked about the EU windfall tax litigation.

A: Darren Woods said the legal process is slow with no current update on timeline.

Q: Roger Read asked about cost savings updates.

A: Darren Woods and Kathy Mikells discussed ongoing cost savings efforts, with $12.7 billion saved since 2019, and significant opportunities from centralized organizations and technology.

Q: Bob Brackett asked about tariffs and project organization.

A: Darren Woods said the project organization is managing tariffs, with no material impact seen to date on ongoing projects.

Q: Joshua Silverstein asked about upstream strategy shift.

A: Darren Woods said no shift in strategy, with focus on long-term fundamentals and taking advantage of short-term dynamics if beneficial.

Q: Ryan Todd asked about refining performance.

A: Darren Woods said refining performance is strong due to years of work on asset reconfiguration, high-grading the portfolio, and focus on refinery operations reliability and cost reduction.