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    Exxon Mobil Corp (XOM)

    Q2 2024 Earnings Summary

    Reported on Jan 10, 2025 (Before Market Open)
    Pre-Earnings Price$116.95Last close (Aug 1, 2024)
    Post-Earnings Price$115.97Open (Aug 2, 2024)
    Price Change
    $-0.98(-0.84%)

    What went well

    • The Pioneer acquisition is exceeding expectations, with enhanced synergies and Permian production surging to 1.2 million barrels per day.
    • Production in Guyana continues to exceed expectations, with higher production rates across all FPSOs, indicating strong future growth potential.
    • Significant progress on structural cost savings, achieving $1 billion in savings year-to-date, targeting $15 billion by 2027, improving efficiency and profitability.

    What went wrong

    • Chemical margins are under pressure due to significant new capacity coming online, leading to oversupply and reduced profitability in the sector.
    • The Golden Pass LNG project is delayed by approximately 6 months, with first LNG now expected in late 2025 instead of mid-2025, potentially impacting future earnings.
    • Developing low-carbon solutions faces significant challenges, including the need for finalized government regulations to ensure project viability and the complexities of building new markets, which may affect future profitability in these areas. ,

    Q&A Summary

    1. Pioneer Acquisition Performance
      Q: How are the Pioneer assets performing post-acquisition?
      A: The Pioneer assets are performing better than anticipated, delivering record performance in the second quarter. Early integration shows significant upside potential, with more value opportunities identified than initially expected. Synergies are tracking ahead of expectations, leveraging best practices from both ExxonMobil and Pioneer.

    2. CapEx Guidance Increase
      Q: Why has the legacy CapEx guidance increased to $25 billion?
      A: The increase to the top end of the range reflects progression of highly advantaged projects and attractive opportunities identified since last year. Projects coming online in 2025, such as the large China One chemical complex, contribute to the higher capital expenditure.

    3. Golden Pass Start-Up and Upstream Sales Mix
      Q: What's the update on Golden Pass LNG start-up and sales mix diversification?
      A: Golden Pass LNG start-up is delayed by about six months, with first LNG expected in the back end of 2025 due to restaffing after contractor settlement. ExxonMobil intentionally remains weighted toward liquids pricing in its upstream portfolio, aligning with contracting practices in LNG markets, and is comfortable with this exposure.

    4. Portfolio High-Grading and Divestments
      Q: Will there be asset disposals after acquiring Pioneer?
      A: ExxonMobil has been actively divesting non-core assets, reaching around $15 billion in Upstream divestments and additional billions in Downstream. The company continues to assess assets for competitiveness, improving or divesting if they don't meet criteria, but doesn't anticipate big step changes in the medium term.

    5. Guyana Production Performance
      Q: Will outperformance in Guyana continue with future projects?
      A: Production in Guyana has exceeded expectations, with FPSOs producing above capacity. ExxonMobil anticipates continued outperformance due to organizational focus and technology application, though recognizing each development is unique.

    6. Cost Savings Progress and Outlook
      Q: What's driving recent cost savings and future outlook?
      A: Structural cost savings reached $1 billion year-to-date, with $600 million in the quarter. Savings are driven by optimized maintenance, supply chain efficiencies, and centralized organizations standardizing processes. ExxonMobil aims to achieve $15 billion in savings between 2019 and 2027.

    7. Low Carbon Investment Progress and Roadmap
      Q: What's needed to advance low carbon investments?
      A: ExxonMobil requires low carbon projects to be advantaged and generate good returns across cycles. Progress depends on final regulations (e.g., IRA legislation for blue hydrogen) and developing markets, with a focus on building strong, long-term foundations rather than rushing investments.

    8. Economic Outlook and Demand Trends
      Q: What are current demand trends and economic outlook?
      A: Global demand remains strong with record levels in oil and petroleum products. Chemical demand is returning to pre-pandemic growth rates, but margins are pressured due to supply additions. China and the U.S. show reasonable growth, while Europe faces economic challenges.

    9. 2025 Project Updates
      Q: How are key 2025 projects progressing?
      A: Major projects like the China One chemical complex, Singapore residue upgrade, and Strathcona renewable diesel are on track. These projects contribute to underlying earnings growth and are proceeding consistent with planned development and announced dates.

    10. Long-Term Project Pipeline Beyond 2027
      Q: Are new projects being developed beyond 2027?
      A: ExxonMobil is leveraging its reorganized structure to unlock new opportunities across businesses. The company continues to build a pipeline of projects extending well beyond 2027, focusing on applying core capabilities to create value.

    11. Lithium Complexity Clarification
      Q: Does lithium complexity refer to marketing or processing challenges?
      A: The comment on lithium complexity pertains to integrating new production methods with established technologies. Challenges involve combining new technology in processing and building new value chains, with complexities in both upstream and downstream.

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