Integrated energy major ExxonMobil is seeing bottom-line gains by simplifying and standardizing operations, a strategy that should continue to benefit the global natural gas and oil operations, CEO Darren Woods said Friday.
“Overall, market conditions were softer in the second quarter,” he said during the second quarter conference call. Natural gas prices continued to slump but “oil prices remained firm.”
Natural gas traded at Waha averaged negative 53.7 cents/MMBtu during 2Q2024, down from $1.502 in the year-ago period, according to NGI’s Daily Historical Data. Prices at the benchmark for the Permian Basin, where ExxonMobil saw production jump year/year from its merger with Pioneer Natural Resources Co., have remained suppressed at negative 14.0 cents as of Monday (Aug. 5).
Woods was asked how the tie-up with the Permian pure-play, which was completed in May, was impacting operations.
“It’s early days yet, two months in, but the work of the team prior to the change in control, and then what we've seen since then, it's extremely encouraging,” he said.
“The Pioneer assets basically delivered a record performance in the second quarter…So I'd say vectors are all pointing up, I think, probably better than what we had anticipated.”
The combined teams have identified “a lot more value opportunities than, frankly, I think either of us could see when we were on opposite sides of the fence.”
ExxonMobil’s base Permian production was 680,000 boe/d in the second quarter. When combined with Pioneer Natural volumes, though, output hit a record 1.2 million boe/d.
Offshore Guyana also continued its win streak, with gross output exceeding 630,000 boe/d. Woods made clear that the offshore work in the Stabroek block is in the early innings.
An application is in the queue with the Guyanese Environmental Protection Agency for Hammerhead, which would be the seventh development for the ExxonMobil-led development. If Hammerhead were to be approved, production capacity could average 120,000-180,000 boe/d, with anticipated start up in 2029.
[Lower 48 Natural Gas Market Fundamentals: Join NGI’s Patrick Rau, senior vice president of Research & Analysis, in a forward-looking episode of NGI’s Hub & Flow podcast to hear the latest estimates for natural gas production growth in 2025.]
Worldwide oil and gas output increased to 4.3 million boe/d from 3.6 million boe/d in 2Q2023.
Natural gas production available for sale climbed to 8.24 Bcf/d from 7.53 Bcf/d. Domestic natural gas output rose to 2.90 Bcf/d from 2.35 Bcf/d. In the Canada/Other Americas segment, gas production increased to 114,000 Mcf/d from 97,000 Mcf/d.
Not So Golden
Woods confirmed during the call that the start up for the natural gas export project underway on the upper Texas coast by Golden Pass LNG Terminal LLC will be delayed until the second half of 2025. QatarEnergy is partnering in the 18 million metric ton/year (mmty) liquefied natural gas project. Once online, each of the three trains could add around 700 MMcf/d in feed gas demand, according to NGI calculations.
ExxonMobil plans to publish its annual global outlook in September, but Woods previewed the findings. The research team expects worldwide energy demand will be 15% higher in 2050 than it is today.
“We see all demand holding steady at around 100 million boe/d in 2050,” Woods said.
“Demand for renewables and natural gas grows considerably.”
However, “as it becomes more obvious that heavy industry and commercial transportation will not be meaningfully powered by renewables, the world will come to rely more on technologies where we have an advantage,” including in hydrogen, biofuels and carbon capture and storage (CCS).
Energy leaders, Woods said, have to take a “serious approach to the transition.”
As he and some of his peers have repeatedly said, the focus should be “on moving the world from high carbon to low carbon energy, not simply from oil and gas to wind and solar. The data, science and economics all support this as fundamentally necessary.”
ExxonMobil is “not defined by our existing product suite,” the CEO told investors. “We began as a maker of kerosene for lamps. Today, no one thinks of ExxonMobil as a kerosene company serving the lamp industry.”
Most of Woods’ remarks, though, centered about an evolving strategy to become more data driven.
“As we sit here today, we'll be able to apply more technology to get even more automated in the things that we do, which will drive further efficiencies for us long term,” Woods said.
The energy behemoth, headquartered in Spring, about 20 miles from Houston, has “the largest program, by far, of anybody in the industry, and now a very proven track record that…typically is overdelivering.”
Into the future, “ExxonMobil will be defined by the technologies and products it is producing to meet the world's future needs, as always, by drawing on a unique combination of competitive advantages.”
Still, the “hurdle for investing will be high,” Woods noted. “Any investment will have to generate competitive returns, possess clear competitive advantages and be resilient to the bottom of any commodity cycle.”
During the second quarter, ExxonMobil and Air Liquide SA agreed to support production of virtually carbon-free hydrogen at a planned hydrogen facility at ExxonMobil’s Baytown complex southeast of Houston.
ExxonMobil also signed a nonbinding memorandum of understanding (MOU) during the quarter with SK On, an electric vehicle battery developer. If the MOU is turned into a binding agreement, ExxonMobil could provide up to 100,000 metric tons of lithium from its first planned project in Arkansas. The lithium would be used in SK On’s U.S. manufacturing operations.
In the CCS business, ExxonMobil achieved its fourth agreement with CF Industries Holdings Inc., a top industrial customer. The deal brought ExxonMobil’s total contracted carbon dioxide (CO2) to store for industrial customers up to 5.5 mmty. ExxonMobil plans to transport and store up to 0.5 mmty of CO2 from CF operations in Yazoo City, MS.
Net profits jumped year/year to $9.2 billion ($2.14/share) from $7.9 billion ($1.94). Total revenue increased to $93 billion from nearly $83 billion.
Upstream earnings improved to $7 billion in 2Q2024 from year-ago profits of nearly $5 billion. U.S. upstream profits, which included the Pioneer Natural contribution, climbed to $2.4 billion from $920 million.
