Twenty-five years ago, Exxon and Mobil celebrated like it was 1999.
In fact, it is was 1999, and the two oil companies signed an $81 billion deal to form Exxon Mobil. (XOM) creating the third largest company in the world at the time.
“This is not a combination based on desperation, but on opportunity,” said then-Mobil CEO Lucio Noto when the deal was first announced. “But we must face some facts. The world has changed. The easy things are left behind. Easy oil, easy cost savings, that's it. “Both of our organizations have sought internal efficiencies wherever possible.”
And the world has changed a lot since those last days of the 20th century.
The technology sector has grown exponentially since then and the rise of artificial intelligence is creating a staggering demand for electricity.
Worldwide, data center demand accounts for around 0.5%, according to <a target="_blank" href="https://www.energypolicy.columbia.edu/projecting-the-electricity-demand-growth-of-generative-ai-large-language-models-in-the-us/”>Columbia University Center for Global Energy Policy.
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ai data centers specifically could require approximately 14 gigawatts of additional new power capacity by 2030.
Houston Chronicle/Hearst Newspapers via Getty Images/Getty Images
Exxon Mobil working on gas-fired plant
“If the United States follows a similar data center growth trajectory as Ireland, a pioneering country whose data centers are projected to consume up to 32% of the country's total annual electricity generation by 2026, could face a significant increase in energy demand. pressure on infrastructure, rising emissions, and a host of new regulatory challenges,” the center said in a July report.
Exxon Mobil, the largest U.S. oil and gas company, is designing a natural gas power plant equipped with carbon capture technology to meet demand from the technology sector. The New York Times reported on December 11.
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The plant will be equipped with technology that can capture more than 90% of the facility's carbon dioxide emissions.
The project is in the early stages of development and would be the first time Exxon built a power plant that did not supply electricity to its own operations.
Exxon, which has secured land and is talking to potential customers, aims to have the power plant up and running within the next five years.
“We're driven by market demand here,” said Dan Ammann, who heads the company's low-carbon business. “It is low carbon, available on an accelerated schedule, and avoids all grid interconnection challenges.”
Meanwhile, Exxon Mobil unveiled its corporate plan through 2030, where the energy giant expects to generate incremental growth potential of $20 billion in profits and $30 billion in cash flow.
“ExxonMobil has a unique set of high-value competitive advantages that equip us to do what few companies have ever done: create global solutions to society's biggest challenges, decade after decade,” said Darren Woods, president and CEO. ExxonMobil executive. in a statement.
ExxonMobil wants to increase its total production from the current 4.58 million barrels of oil per day to 5.4 million bpd.
Oil prices have been falling. As of December 4, the average price of crude oil was down 11.14% from a year ago, to $72.29 per barrel.
At constant price and margin, the company is generating more than $15 billion in earnings and more than $20 billion in cash flow compared to 2019. It has generated structural cost savings of more than $11 billion so far this year compared to 2019.
Cash flow has grown faster than any other integrated oil company over the past three to five years, the company said.
Exxon Mobil has increased its annual dividend per share for 42 consecutive years and recently increased its quarterly dividend by 4 cents per share, beginning this quarter.
Exxon Mobil seeks low emissions opportunities
The company said it is pursuing up to $30 billion in low-emissions opportunities between 2025 and 2030, with nearly 65% to be spent on reducing emissions for third-party customers.
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Exxon Mobil said it expects cash capital expenditures to be in the range of $27 billion to $29 billion in 2025, reflecting Pioneer Natural Resources' first full year in the portfolio and investment to build new businesses. with base capital expenditures remaining stable.
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The company completed its $64.5 billion acquisition of Pioneer in May and, as a result, ExxonMobil has the largest contiguous acreage position in the most active and prolific oil-producing basin of the Permian Basin in West Texas, “with the double the number of net cost of drilling locations compared to the next closest competitor.”
The acquisition sparked controversy when the Federal Trade Commission said it would not sue to block the acquisition as long as former Pioneer CEO Scott Sheffield was prohibited from obtaining a seat on Exxon's board of directors or serving in an advisory capacity. after acquisition.
The FTC said Sheffield had colluded with OPEC and OPEC+ representatives to reduce oil and gas production, “which would result in Americans paying higher prices at the pump, inflating his company's profits.”
Sheffield filed a motion to vacate the proposed consent order, saying the FTC “erred in implying that I ever engaged in, promoted, or even suggested any form of anticompetitive behavior.”
Exxon Mobil shares are up nearly 12% since the start of 2024.
In November, the company reported third-quarter earnings of $1.92 per share, down 15% from a year ago. Revenue totaled $90.02 billion, down about 1% from the previous year.
Analysts expected the company to earn $1.88 per share on revenue of $93.98 billion.
“In 2024, year-to-date earnings are approximately double what they were in the same period in 2019 on a constant margin basis,” Woods said during the call. company earnings call.
“For all our businesses, we have focused on reduced costs, high-return investments and selected divestitures to improve profitability, particularly in late-cycle conditions,” he added.
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