How Has ExxonMobil’s Upstream Production Trended?

ExxonMobil (XOM) produced 3.8 MMboepd (million barrels of oil equivalent per day) from its worldwide operations in 3Q16. Note that of this total production, 3.1 MMboepd, or 82%, came from its international operations.

Liquids account for 2.2 MMboepd, or 58%, of XOM’s total production. Crude oil prices have fallen sharply in the past few quarters. XOM’s average US crude oil realizations fell to $39 per barrel in 3Q16, compared to $42 per barrel in 3Q15. XOM’s average international crude oil realizations stood at $41 per barrel in 3Q16, marginally higher than its US realizations.

XOM’s natural gas realizations from its international operations were ~69% higher than the realizations from its US operations. Average gas realizations from the United States stood at $2.7 per kcf (thousand cubic feet) in 3Q16. XOM’s international operations yielded $4.5 per kcf. These lower prices were on account of a higher supply of natural gas in the United States.

XOM expects ten projects with working interest production capacity of 0.45 MMboepd to start operations in 2016–2017. These include huge projects such as the Gorgon in Australia, the Kashagan Phase 1 in Kazakhstan, the Upper Zakum in the United Arab Emirates, the Julia Phase 1, the Odoptu Stage 2, and the Hebron. Some of these projects already started operations in 2016.

ExxonMobil has a high-quality, diversified portfolio of upstream assets that hold proved reserves to the tune of ~25 billion barrels of oil equivalent. Plus, ExxonMobil’s Permian Basin deal, discussed in Part One of the series, and its oil discoveries offshore Guyana, discussed in Part Two of the series, should further boost its upstream portfolio in terms of higher production and a larger resource base.

If you’re looking for exposure to integrated energy sector stocks, you can consider the iShares North American Natural Resources ETF (IGE). The ETF has ~22% exposure to the industry.