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ExxonMobil’s Upstream Portfolio Is Set to Expand

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Production

ExxonMobil (XOM) has a sound upstream portfolio. Before we review ExxonMobil’s key growth assets, we’ll discuss the company’s production expectation for the first quarter.

ExxonMobil expects its first-quarter production to be in line with its fourth-quarter output. The company’s production could be 4.0 MMboepd (million barrels of oil equivalent per day) in the first quarter—higher than 3.9 MMboepd in the first quarter of 2018. The company’s fourth-quarter volumes were higher year-over-year, which we discussed in the previous part.

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ExxonMobil’s strong upstream portfolio

ExxonMobil has a strong projects pipeline. The company’s key projects are expected to be operational by 2025. The projects are expected to contribute ~50% of ExxonMobil’s upstream earnings. ExxonMobil expects its upstream earnings to triple by 2025—assuming that oil prices are $60 per barrel.

The important upstream assets expected to bring in growth include shale and tight assets in the United States, deep-water assets in Guyana and Brazil, and LNG (liquefied natural gas) assets in Papua New Guinea and Mozambique. These projects have high upside potential.

ExxonMobil is expanding rapidly in the Permian. The tight oil production from the Permian rose 12% sequentially in the fourth quarter. The Permian’s net resources have grown to ~10 billion boe (barrels of oil equivalent). The company expects to grow its production in the Permian by more than 1 MMboepd by 2024. In Guyana, ExxonMobil had 12 discoveries, which represent ~5.5 billion boe of the estimated gross recoverable resources. One of the initial discoveries in the region, Liza Phase 1, is on schedule to start production in the first quarter of 2020. ExxonMobil’s low-cost LNG assets are set to tap the growing global demand for LNG. ExxonMobil and its partners have secured LNG offtake commitments for the Rovuma LNG project in Mozambique.

ExxonMobil’s production is expected to rise due to its strong upstream projects pipeline.

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