Exxon Mobil Corp (XOM) — Q3 2023 Earnings Call Transcript

Good morning everyone. Welcome to Exxon Mobil’s third quarter 2023 earnings call. We appreciate your joining the call today. I’m Jennifer Driscoll, Vice President, Investor Relations. I’m joined by Darren Woods, Chairman and CEO; Kathy Mikells, Senior Vice President and CFO; and Neil Chapman, Senior Vice President. This presentation and pre-recorded remarks are available on the Investors section of our website. They are meant to accompany the third quarter earnings release, which is posted in the same location. Shortly, Darren will provide brief opening comments and reference a few slides from his presentation, then we’ll take your questions. In conjunction with our recent announcements regarding Pioneer Natural Resources and Denbury, we’ve included additional information on Slide 2 related to comments or information included in today’s presentation. Please be aware that this presentation is not intended to be a solicitation of any vote for approval. During today’s presentation, we’ll make forward-looking statements which are subject to risks and uncertainties. Please read our cautionary statement on Slide 3. You can find more information on the risks and uncertainties that apply to any forward-looking statements in our SEC filings on our website. Please note that we also provided supplemental information at the end of our earnings slides, which are posted on the website. Now please turn to Slide 4 for Darren’s opening remarks.

Good morning. Thanks for joining us today. We delivered another robust quarter of earnings, cash flow and shareholder returns, reflecting our ongoing efforts to structurally improve our company and drive sustained industry-leading performance. We reported $9.1 billion of earnings, an increase of $1.2 billion compared to last quarter. While the market provided a bit of tailwind, our success was enabled by the continued strength of our operational performance, which reflects the hard work of our people across the company. Whether it’s continuing to drive efficiency in maintenance and turnarounds, running at high throughputs and utilization rates, or delivering big projects at first quintile cost and schedule, the excellent work of our people underpins our results and sustains our drive to deliver industry-leading performance in everything we do. The work is fundamentally strengthening the underlying earnings power of the company, establishing a strong foundation to deliver industry-leading results in any price environment. Consistent with our capital allocation strategy, we continue to share the success of the company with our shareholders. This morning, we were pleased to announce a 4% increase to the quarterly dividend to $0.95 per share. This year is our 41st consecutive year of annual dividend increases, a record that we’re proud of and that we know our investors value highly. We continue to strengthen our portfolio of businesses by investing in advantaged high return opportunities while divesting businesses that are no longer a strategic fit. During the quarter, we closed on the sale of our Thailand refinery, bringing our year-to-date cash proceeds from asset sales to more than $3 billion. We followed this in October with the close of the refinery sale in Italy. Recently announced acquisitions are great examples of the equation, meeting the world’s needs for energy and essential products and reducing emissions. Acquiring Denbury strengthens our position to economically reduce emissions in hard-to-decarbonize industries, which today have limited practical options. We see the potential to drive strong returns with the capacity to reduce the nation’s carbon emissions by 100 million tons per year - that’s 20 times our current CO2 off-take agreements with CF Industries, Linde and Nucor, which by themselves could reduce CO2 emissions by an amount equivalent to replacing two million cars with EVs, roughly the same number of electric vehicles currently on U.S. roads. We expect to close the transaction in early November with Denbury shareholders scheduled to vote next week. Earlier this month, we signed an agreement to acquire Pioneer Natural Resources in another all-stock transaction. This combination will further strengthen our already advantaged upstream portfolio and create significant value for the shareholders of both companies. Together, we will recover more resources more efficiently and with a lower environmental impact. We plan to accelerate Pioneer’s Permian net zero ambition by 15 years and fully leverage their advances in water recycling. This deal is a win any way you look at it - good for our shareholders, good for the environment, good for the economy, and good for U.S. energy security. Neil will say more about the benefits of the transaction in a few moments. We’re also continuing to drive profitable growth organically. In energy products, we achieved the highest third quarter refinery throughput on record, driven by our Beaumont refinery expansion. At a time of strong demand and low inventories, this project is providing 250,000 barrels per day of much needed new capacity to the market. In addition, we recently started up our Baytown chemical expansion, which grows volume and improves mix. It provides 750,000 tons per year of new performance chemical capacity, including 350,000 tons of linear alpha olefins, marking our entry into this growing market. We delivered another quarter of strong operational and financial performance with earnings of $9.1 billion and cash flow from operations of $16 billion. These results reflect the structural earnings improvements we’ve delivered over the past several years as we’ve improved our mix of assets and driven significant structural cost reductions while maintaining our focus on industry-leading safety and reliability. We have lowered our structural costs by $9 billion since 2019, meeting our plan, and expect to deliver additional savings in the fourth quarter. We continue to identify opportunities to improve our base operations, including enhancing our maintenance and turnaround processes, strengthening our digital capabilities, and optimizing our supply chain. Our year-to-date production of 3.7 million oil-equivalent barrels per day is on track with our full year guidance. Capex investments of $18.6 billion year-to-date are on plan. We expect 2023 capex to finish the year at the top end of our guidance range as we continue to invest in high return advantaged projects, our top priority for creating long term shareholder value. As always, we remain focused on sharing the company’s success with our shareholders. We delivered $8.1 billion in shareholder distributions in the third quarter, $3.7 billion in dividends, and $4.4 billion in share repurchases. With that, I’ll turn it over to Neil.

Thanks Darren. Good morning everyone. As we said with you recently, Pioneer is arguably the best Permian pure play company with the largest undeveloped Tier 1 inventory in the Midland basin. Pioneer’s premier asset base is matched by the quality of its workforce. Its employees are innovative and hard working and possess a deep knowledge of unconventional operations in the Permian. When you combine these attributes with our technology and industry-leading operational capabilities, we’re confident we can unlock far more value together than either of us could do alone. We expect synergies of approximately $1 billion before tax annually, beginning in the second year post closing, and an average of about $2 billion per year over the next decade driving double-digit returns. This transaction not only strengthens our current position but it also transforms our portfolio, increasing our exposure to short cycle low cost supply liquids in the United States. Based on our initial assessment, we expect our combined Permian production to increase to approximately 2 million oil-equivalent barrels per day by the end of 2027. Downstream, this merger also increases the integration between high value light Permian crude and our premier refinery and chemical footprint on the U.S. Gulf Coast. Finally, we’ve said many times that we’re working to solve the end equation, providing the energy and products society needs and reducing emissions, both ours and others. This transaction reflects both parts of our commitment. We will increase our Permian production with plans to accelerate Pioneer’s net zero plan to 2035 from 2050, and decrease our combined Permian emissions. With that, I’ll pass it to Jennifer.

Thank you Neil. We have two quick announcements to share with you. First, please mark your calendars for our annual corporate plan update scheduled for Wednesday, December 6 at 9:00 am Central time. Jennifer and Kathy are going to provide formal remarks and take live questions from our sell-side analysts. Second, please keep an eye out for our 2024 Advancing Climate Solutions report. We expect to publish it online in mid-December. With that, we’re going to begin our Q&A session. Please note we continue to ask analysts to limit yourselves to one question as a courtesy to others; however, please remain on the line in case we need any clarifications. Operator, please bring us the first caller.

Good morning and thanks for the update. The first question for me is on the Permian here. Slides 17 to 19 are interesting and incremental. I was wondering if you could take a moment to walk us through it. Just in the context of the investor feedback we’ve gotten around the transaction, folks are looking for a little more clarity on the top line synergies that are going to come from better productivity. Thank you.

Yes, good morning Neil. You know, what we outlined in the slide with the earnings release is really the basis of what I’d always describe as real, quantifiable synergies that have created the deal space for this transaction. These synergies are already demonstrated in our existing operations, either in the Delaware or the Midland. It does not include the pipeline of new technologies that are either in the early stages of deployment or close to deployment. By applying what we’ve already demonstrated, we’re confident we can recover an additional one billion oil-equivalent barrels, more than either Pioneer or industry could have demonstrated with their existing performance. In the charts, we highlight two areas. One, the industry’s move to cube development. We’ve moved to cube development to get the higher net present value. We were the pioneers in that, and that’s obviously to avoid the parent-child impact. The top chart on there shows that we’ve been drilling cubes since 2020 100% in the Midland, and you can see that over the period, Pioneer has moved to 100% cubes as well. In 2022, when we were both developing 100% cubes, you can see we’ve got equivalent recovery rates, but we’re at notably lower quality acreage, lower quality resources, so equivalent recovery at lower quality resource, and when we look at truly comparable acreage, and that’s really, really important because generalizations can lead to misleading results. In the bottom, we talk about adjacent Martin County, where us and Pioneer and one of our other peers are drilling the same 10,000 lateral cubes, you can see we get a 20% higher recovery, and that’s why we’re all targeting the same intervals. These are similar in similar proportions. What varies and what’s the difference is the stacking and landing zones, and what varies is the optimal wealth spacing that we are delivering, which includes things like vertical orientation. Just one final point on that, Neil, in terms of recovery - it’s not just about how you deliver cubes. When you’ve got better recovery, when you’ve got better capital efficiency, it gives access to economically developing what we would describe as secondary benches. As you’ll recall, like the Wolfcamp C and like the Wildhorse mill extension, and in addition obviously we have other techniques that we attempt to keep confidential, which gives us this higher level of recovery.

Thank you Neil.

Good morning. When you talk about your two million barrel a day initial sort of view of where production from the combined entity can get to in 2027, how do I think about the gating factor? Is that a fixed rig or activity or capex program and the volume is an outcome, or is that a volume target and you’ll adjust activity down as more synergies come through?

Yes Bob, it’s Neil again. I want to be clear - we don’t have a volume target. We have a value target, we have a volume outcome, and that’s really, really important. For our basis, we’ve talked about an outcome being a million barrels a day by the end of 2027 based on our Delaware and Midland Basin. Based on our initial assessments of Pioneer’s plans, obviously we’ve had access to that through the due diligence process, we see that with similar capital spending as Pioneer has today, and you can equate that to a similar number of rigs, we would anticipate that Pioneer’s production under Exxon Mobil and Pioneer’s combined operations would also get to a million barrels a day by the end of 2027. If you add current production in the Midland Basin from both Pioneer and Exxon Mobil today, it’s already at a million barrels a day. It’s really important, though - volume is an outcome. We’re striving for the value, that’s why we focus on the cube development. But I would say the basis is consistent with existing capital spending that Pioneer are making today. We do anticipate, as I’ve just outlined, improvements in recovery. We do anticipate improvements in capital efficiency based on the synergies that we outlined in the earnings release, but that’s not really built into that outlook of a million barrels a day from the Pioneer operations.

Very clear, thank you.

Great, good morning. Thanks for taking my question. I wanted to stick with upstream and take advantage of having you on the call here, Neil, and ask about Guyana. The slide noted that production is now coming in ahead of plan for the full year, a little bit better than your full year target, and part of that is the Payara start-up, part of that seems to be debottlenecking. I want to just focus on the debottlenecking opportunity. Could you walk us through how much uplift you’ve realized so far versus nameplate, how much is left, and then the repeatability of this outperformance as we look at the additional FPSOs that are set to start up over the next few years.

Thank you. We are very encouraged by the developments in Guyana. Currently, we have two boats operating. Liza 1, also known as Destiny, has a nameplate capacity of 120,000 barrels a day, and we are consistently running it at around 150,000 barrels a day. Liza 2, referred to as Unity, has a capacity of 220,000 barrels a day, and we have been able to maintain production above 240,000 barrels a day. Together, these two are approaching 400,000 barrels a day due to solid operational performance. We continuously analyze and optimize every aspect of the operations to maximize output. We are also in the process of starting up Payara, which has a nameplate capacity of 220,000 barrels a day, and we expect a similar uplift in performance. The plan is to begin operations in mid-November, giving us a combined nameplate capacity of 560,000 barrels a day. However, with the initial two boats producing around 400,000 barrels, we anticipate exceeding 600,000 barrels a day in total production. Additionally, we have three more boats planned, namely Yellowtail, Uaru, and Whiptail, each with a capacity of 250,000 barrels a day. Yellowtail and Uaru are currently under construction, while we have submitted the development plan for Whiptail to the government and expect to reach a final investment decision in 2024. By the end of 2027, we anticipate a combined nameplate capacity of 1.2 million barrels a day, not accounting for the enhanced production performance from the first two boats. Our message to the team is to prioritize safe and timely start-ups for each vessel, including Payara, and once we are established, we will apply similar protocols as we did with the first two boats to maximize production, benefiting our shareholders, co-ventures, and the country as a whole.

Yes, I would add to Neil’s comment, if you recall, we brought all our projects organization together to make sure that we were leveraging the best capability in terms of development in designing these projects. We’ve also brought together our technology organizations, and the big benefit we have there is we’re now leveraging not only the capacity that was in the upstream in terms of optimization around these facilities, but we’ve decades and decades of experience of people optimizing and running our chemical plants and our refinery facilities to squeeze out and optimize every piece of the production pipeline and make sure that we are at the designed limits of the different equipment. That optimization, which has been kind of the lifeblood of the refining business, given the very narrow margins, has big payoffs when we apply it to the upstream facilities, and so there’s an additional benefit just in terms of leveraging the broader organizational capability, which again has been part of our strategy from the very beginning, is to make sure that we’re bringing to bear the best thinking across the corporation on the most important facilities and projects, and this is certainly one of those.

Great, thanks so much.

Good morning. Thank you for taking my question. Hi everyone. Darren, if you don’t mind, I’d like to ask Neil a follow-up question about Guyana. Neil, a couple of years ago, you mentioned that if the deeper resource potential turned out to be as promising as the original targets, you could potentially double your resource estimate from ten, which you had indicated was possibly much larger. It's been some time since you've updated that resource number. Now that you have Lancetfish, it appears Fangtooth is next based on your EIS submissions to Guyana, but you are still discussing production capacity rather than actual production. My question is, given the need to keep these boats filled for a long period, what do you forecast for actual production versus capacity growth through the end of the decade?

Thank you, Doug. There are two aspects to your question: exploration and production capacity. First, regarding exploration, we have made three discoveries this year, the most recent being Lancetfish-2. We are working to integrate these results from both exploration and appraisal drilling and will update our resource base when we see a significant change. Our exploration and appraisal program continues, particularly in the southeast corner of the Stabroek Block, where we are focusing on appraising our current discoveries, which involves considerable work and effort. We currently have six drill ships in the basin engaged in development appraisal and exploration drilling. In addition to the appraisal drilling in the southeast, we are also searching for what I consider anchor prospects further north and west. We are planning to pursue about three true wildcat or exploration targets with appraisal wells expected in the next 10 to 12 months, subject to changes based on drilling results. We will provide updates when we have meaningful or significant information. We have six FPSOs planned, which are confirmed, and I previously outlined their details. These will have a capacity that we aim to maintain at full levels consistently. The Stabroek Block offers advantages due to the resource density and the close proximity of the vessels, allowing for future tie-backs. However, as is common in deep water, the water cut will increase, and we need to monitor that closely. We focus on capacity and optimize our operations, aiming to enhance production relative to our nameplate capacity. We can confidently state that we will have six boats operational by the end of 2027 with a nameplate capacity of 1.2, and we will strive to keep them as filled with liquids or oil as possible during that time. As we approach 2027, we will update these figures, Doug.

Appreciate the full answer, Neil. Thanks so much.

Great, thank you. We’re going to keep Neil busy this morning. Another one on the Pioneer disclosure - appreciate the incrementals. Neil, I guess it sounds like from your previous comments, the million barrels a day target, that output is still there from the legacy composition and you’re thinking about the additive from Pioneer. Can you talk a little bit about as you integrate the two assets, are you assuming some high grading around some of the higher quality acreage? Do you envision prioritizing more activity on one asset versus the other, or are you still kind of thinking about them as two separates? Also, maybe you can just talk a little bit about assumptions around acreage bolt-ons or any positions as well. Is there a lot of work to do in terms of extending some of this lateral length that you’re talking about? Thanks very much.

It's still early in the process, but we've conducted our due diligence and are now in the transition phase. I want to emphasize that Pioneer is a highly capable organization, and we’re really excited about the potential of combining our two companies. Pioneer has extensive expertise in the Midland Basin, which is known for its top-tier quality resources, and they have excelled in developing those resources. On our side, we bring a variety of operational techniques, development plans, and technologies, and we are particularly enthusiastic about integrating these strengths. The initial transition work indicates that we are on the right track. Considering the acreage positions of Exxon Mobil and Pioneer, there is a significant opportunity for optimizing our inventory, including bolt-on acquisitions. I must commend Scott Sheffield and his team for their exceptional work in expanding their acreage in the basin, and they possess a highly skilled land organization. We look forward to collaborating with them. Overall, I believe this partnership will be exceptionally effective in resource development.

I’d just add to what Neil said, if you look at what we’ve been doing over the last six years, it’s really been around integrating our organizations, consolidating them, and making sure that we’re concentrating like capabilities into the same organization, and that is paying huge dividends. This is no different. The intent is to fully integrate the Pioneer organization and its people into our business. My expectation is we’ll bring a lot of advantages to their acreage, but at the same time, we expect their people to bring a lot of advantages to other parts of our business, including what we’re doing in the Delaware. Our whole strategy is really around the value you create by taking experts in areas and getting the collaboration and the innovation that comes from that, so there won’t be a separate approach here. It will be one. I think what you’re seeing today, to Neil’s point, the fact that we’re in very early stage, but as we get together and work through the plans and the development, it will be one seamless integrated organization and plan.

Steve, just one small addition to illustrate that. I’ve talked before that we have a basin-wide remote operations centers in Houston where we control all our operations in Houston - that’s drilling, that’s fracking, the field operations, that's methane tracking, methane emissions tracking as well from one central control center in Houston. Obviously our plan would be to bring in the whole Pioneer operations in time to have one central organization. What this gives you is it gives you all that competency, all that expertise applied to the whole of Midland and Delaware Basins from one central control center.

Thanks very much.

Yes, thanks. Good morning. Keeping with the upstream theme here, I’d like to dig into the, I guess call it a slight transition here, the high value-added or high margin liquid barrels, so specifically the comment, 100,000 barrels a day higher versus 2022’s gases declined or been sold, and the liquids have grown. But as you think about the change out to 2027, the growth in Guyana, the growth in the Permian, and we compare that to where you were, say in 2019, how do you think about the total value-added liquid barrels, the impact on margins, the impact on returns? What’s the right way for us to think about the transition of the company over roughly that eight-year period?

Roger, it’s Neil again. Let’s just park the Pioneer acquisition for a moment and just talk about our existing plans as Exxon Mobil. Back in 2018 and 2019, I talked about the strength of our developments that we had in the pipeline, and obviously they were headlined by Guyana and by the Permian. What I said at the time is what you will see is an increase in the percent of liquids in our portfolio and a reduction in the percent of dry gas of the total. If I outlook to 2027, we will go from something sub-65% liquids to something around 70% liquids in our portfolio in 2027, and 15% or thereabouts of liquefied natural gas, so that takes us up to 85%, I would call liquids index. Obviously 80% of our LNG sales index to Brent or to crude oil. That’s a big transition but it’s driven by the quality of those resources, primarily in the Permian and Guyana, and we’re going to be adding onto that, of course, the programs we have developed we have in LNG in Papua New Guinea and then in Mozambique at the end of the decade. I’d just add one other comment - if you take the liquids and the LNG, which would take us to 85% liquids indexed in 2027, of the gas that remains, 7% of that is associated gas, so in other words gas associated with liquids production. You can see that we’ll be in the order of magnitude of 7% or 8% of dry gas in our portfolio at that time, and that’s pre the Pioneer acquisition.

I’d just add to that, Roger, if you just step back and think more conceptually around the strategy and what we’re trying to do, every one of our businesses is focused on moving to the left-hand side of the cost of supply curve, so that we remain robust to any period in the commodity cycle and making sure that we’re positioned competitively versus everyone else in the industry. That drive over time to reshape the portfolio continues to move our collective production to the left and to lower cost, and then at the same time adding higher value barrels, we’re lowering cost and increasing revenue, and so that’s where the value game is getting played out. That’s the work that we’ve been doing and that’s the high grading that you’ve seen in the portfolio and the improvements in structural cost. We mentioned at the top of the meeting that we’ve actually achieved the $9 billion in structural cost this quarter, third quarter, so a quarter ahead of what our initial plans were, and we expect to see more in the fourth quarter. As we go forward with the changes that we’ve been making in the organization continuing, we’re going to continue to deliver more structural cost savings. The whole strategy is around making sure that we have the best portfolio and the most resilient portfolio, so that we can basically be successful irrespective of the commodity price environment that we’re in, and that we’re well positioned versus others in the industry. That is the strategy, and you see that playing out certainly in the upstream, but you also seeing it playing out in the downstream where we’ve been high grading our assets there and playing out in our chemical business, where we continue to bring on units that produce high performance products. That strategy is manifesting itself in each of our businesses. Then I’ll just end on that same philosophy underpins what we’re doing in low carbon solution. As we build out that business and position ourselves for the long term, it’s making sure that every investment that we’re making, every value chain that we’re creating, that Dan and his team have a clear view about where that will sit in the cost supply curve, or you can think of it as the cost of abatement curve, and making sure that we’re going to be advantaged versus the rest of the industry.

Great, thank you.

Hi, good morning. Thanks for taking my question. My question is on the capex. Could you maybe help us bridge the top end that you’re guiding to now for this year versus maybe the midpoint? It’s a tight range, so not super material, but just any color there would be helpful. Then I know you’ll give your update in December, but is there any color you can give us directionally on what you’re thinking of for next year on the legacy business, prior to layering in Pioneer? Just anything on the moving pieces for capex next year would be great, thank you.

I would say nothing really unusual going on in capex. As you stated, it was a pretty tight range to start with, obviously with a focus on us looking to ensure that we’re investing in advantaged high return projects - that’s exactly what we’re delivering, so I would characterize this as updated guidance that’s pretty consistent with our plans, and we can give you a further update when we get to that corporate plan discussion later on in December, but we feel very good about our overall execution. As Darren mentioned earlier, we’re bringing projects online at a cost and schedule that’s typically within the top quintile, so we feel really good about our capabilities and our execution and our ongoing focus with our highest priority, ensuring that we’re executing great projects with high returns for our shareholders.

I might just add to that, as we think about capex, we provide that range because we recognized going into the year that things move around a bit, and as we prosecute a plan that with time, we find additional opportunities as things move around. If you look at where we’re at through the third quarter, we are right on our plan, and so as we move forward, we’re going to continue to do the things that we had planned to do last year, but I would say we’re always looking for opportunities to build on the value proposition. If we see it, we’re going to go after it. We’re not going to constrain ourselves artificially to a guidance range if we find an opportunity set; but to date, things are moving pretty consistent with where we thought we were going to be, and frankly as we look out going forward, continue to see a very consistent set of opportunity sets that we’re going to prosecute. I think the one change that we’ll spend more time talking about in low carbon solutions is as that business matures and we establish, I’d say, an advantaged position, there are a lot of opportunities coming our way, so we’re working our way through those opportunities and making sure that we focus on the highest priority ones, the ones that generate the most value and are competitive in our portfolio. We’ll talk more about that as we get into the plan release.

Very helpful, thank you.

Yes, good morning. Thanks for taking my question. A lot’s happened in the past few months, but about three months ago, there was a handful of news articles about Exxon’s lithium endeavors. I just wanted to get an update on that. Are you still drilling in the Smackover for lithium, are you exploring potential processing unit there, and how have things trended the past few months? Do you expect that to figure into your growth plans here over the next five years? Thanks.

Sure, I’ll address that. To provide some context about our objectives in the transition space and more broadly, we are focused on identifying our key technology strengths and capabilities, and determining which businesses can leverage those strengths for a competitive advantage to produce essential products for society. Instead of simply following current trends or conventional thinking about future needs, we prioritize our fundamental contributions that can lead to superior returns compared to the industry. From there, we assess how these advantages align with global demands. Lithium is a crucial component for the future of electrification, particularly in batteries and energy storage. We’ve been examining opportunities in that area, particularly at Smackover, where we have the potential to drill and extract lithium from brine water in a way that minimizes environmental impact compared to traditional production methods. This approach aligns well with our capabilities and is competitive in terms of production costs, making it an attractive opportunity. We have challenged Dan and his team to create a business plan that effectively integrates this opportunity within Exxon Mobil’s portfolio and competes for capital. As they refine this idea, it becomes increasingly promising, and we see significant chances to leverage our existing strengths. This initiative is synergistic with our core businesses. In future discussions, we’ll share more about the direction of our lithium business, which currently appears promising. It’s important to note that we've often been labeled simply as an energy company, which overlooks our substantial chemical operations. Our core competency lies in managing and transforming hydrogen and carbon molecules into necessary products, and lithium fits into this alongside our other ventures in biofuels, hydrogen, and carbon capture and storage. We will continue to develop these areas, and we’re increasingly optimistic about the potential for higher return projects, which will be included in our portfolio moving forward.

Great, that’s really helpful. Thanks.

Thanks. Maybe one follow-up on some of the earlier Permian conversation. You were always known as developing your side of the Permian on a very long-term plan. You’d built out a lot of infrastructure early on. On the infrastructure side, as you think about this post the Pioneer transaction on infrastructure, do you have the combined infrastructure in place that you need to arrive at the 2 million barrels a day of combined production? Will this require any additional infrastructure spend or any shift around in how you think about things versus previously anticipated, and maybe just any comments on whether you see any potential bottlenecks in the basin over the next few years.

Yes Ryan, it’s Neil. I’ll take that question. I think as you’re aware, there is a big difference between the Delaware and the Midland Basins. The Midland Basin has got far more mature infrastructure, and I would say that Pioneer has done an exceptional job in both developing and acquiring and contracting both infrastructure to exit product and for water. It’s quite a difference versus the Delaware. Of course, in the Delaware, we had to put in that infrastructure in place. We did it at scale, we built this large central processing facility called Cowboy. We currently have a capacity there of about 250,000 barrels a day of crude and about 400 Mcfd of gas. We plan to expand that. In the Midland, most of that infrastructure already exists. There is always going to be incremental investment, but nothing like the scale, Ryan, that we have seen in the Delaware. I feel very good about the infrastructure we’ve put in place in the Delaware, and we made that investment upfront. We talked about it in 2018 and 2019, and we’re clearly benefiting from that investment that we made now. Quite a contrast in the Midland.

Yes, I would add to that, if you go back in time, as we were looking at the integrated value chain, we were certainly focused on the molecules that we were producing in the Permian but we also recognized it was an opportunity for us to take advantage of the geographic locale and the proximity to our facilities in the Gulf Coast to optimize broader Permian production, and so we built the logistics systems, pipeline systems and the capability within our facilities to manage that. What we’re now going to be bringing into the portfolio in the Midland fits very well with this broader play of an integrated value chain and making sure that we’re maximizing the value of those molecules through our own facilities. As we said early on when we first introduced this deal, that piece of the equation, which we believe there is a value opportunity on in terms of better managing the molecules from end to end, from the crude clear through to the finished products, we believe there’s additional opportunity there. We’ve got to get in and work through the details of that. My view is that’s additional upside to what we’ve been talking about. It’s one I feel really good about and the one that, frankly, we anticipated early on by making sure that we’d built the capacity ahead of actually needing it for our own molecules, so we’re in a very good position there.

And Ryan, I didn’t answer your question - do we anticipate any bottlenecks, and the answer to that is based on what we have seen so far during the transition work and the due diligence, the answer is no, we don’t see any bottlenecks in getting to the production levels that we anticipate.

Thank you.

Good morning, thanks for the time. Darren, maybe for you or Kathy, my question is on shareholder return. It looks like you paid out a bit over 100% of free cash flow following the prior quarter - I think you were closer to even higher than that, maybe about 118%. I’m just wondering, when you think about shareholder return, will you continue to lean into the buybacks as you look in the out years, or maybe just if you could give a little bit of color. I think I understand your role, your thoughts on the dividend side, so maybe I’m asking a bit more on the share buybacks going forward. Thank you.

I’m happy to take that. If you look at our overall free cash flow results in the quarter, it was just under $12 billion at $11.7 billion, and we paid out $8.1 billion to shareholders, and that was between $3.7 billion in dividends and $4.4 billion in the share repurchase program. In fact, in the quarter our cash balance actually went up $3.4 billion, and we ended the quarter at $33 billion, so I think you can see that in the quarter, we were in fact well under 100% in terms of what we paid out, which is what enables us to grow our cash balance and strengthen our balance sheet even further. You know, when you look overall at our approach to capital allocation, our priorities continue to be the same. First and foremost, let’s make sure we’re investing in advantaged projects that are differentiated, are going to drive high returns for our shareholders. We do that both organically and, as you’ve seen recently, inorganically as well, making sure we’re maintaining a really strong balance sheet - we need that. Ultimately at some point, the cycle will turn against us and that balance sheet will be there for us to lean into, and being balanced in our approach as to how we share the success of the company and those rewards with our shareholders. I think you can continue to see that balance coming through between dividends and share repurchases. We’re looking to be more consistent in our share repurchase program - again, I think you’re seeing that. We continue to say we’re on track to execute $17.5 billion of share repurchases this year. We’ll complete that before the end of the year and we already have a program in place, a similar program in place for 2024, so we’re trying to get that balance right. It’s important that we continue to maintain a strong balance sheet that can carry us through the cycle.

Thank you Kathy.

Thank you, good morning. Neil, the industry in the Permian, whether it’s for emission reasons or for cost efficiency, seems to move and trying to electrify the operation as much as we could, can you share with us where is Exxon in that journey? How far are you in terms of electrifying your operation in the Permian, and when you’re comparing to Pioneer, I don’t know whether you have the information that you can share, and whether you guys are ahead of them or that this will be part of the $2 billion of synergy benefit, or that you’re going to do more aggressively on that, this is going to be on top. Thank you.

Yes, thanks Paul, good to hear from you. From our perspective, we have, I think, 17 rigs running right now in the Permian. All of those rigs are electrified, so we’re 100% on rigs and we’re working on fracs. Right now, I think we have one electric frac out of six frac crews running in the Permian. This is all part of our drive to get to Permian net zero that we said we would get to by 2030. Our plans are in place for that and we’re on schedule for it. That program, it’s simple as this - you have to reduce methane emissions. We’re well on track with reducing methane emissions. We have no routine flaring in the Permian now. We’ve replaced over 6,400 pneumatic devices, so you eliminate or reduce methane emissions, then you electrify your operations, and as I’ve just described, we’re long way down the road in terms of electrification. Then we have to secure renewable electricity for those rigs and frac crews, and that’s the program we’re working on. In terms of Pioneer, I don’t have those numbers for Pioneer in terms of where they are on electrification, but what we have said is that we’re going to advance Pioneer’s target to go to net zero from 2050 to 2035, so 15 years sooner than anticipated, and that will follow probably that same protocol, that same process of reducing methane, electrification, and then securing renewable electricity.

Yes, I would like to add that Scott and the team at Pioneer have focused on this area and have worked diligently to reduce those numbers. Our advantage lies in our large organization and the additional resources we have. We possess a technical team that is actively engaged in this field, collaborating with the industry and other organizations to develop better technology for managing methane. Neil mentioned the central organization we established to monitor activities in the unconventional space, ensuring our real-time response to observations through this centralized operating center. By integrating the Pioneer portfolio into this center, we can leverage the advancements our scale allows. This should significantly enhance our efforts with Pioneer, as we bring in extra capabilities. The culture and mindset are already established, and with the addition of more resources, I expect improvements in our initiatives, enhancing what was already a key focus for Pioneer.

Thank you. Is the savings on your electrification is already built into that $2 billion synergy benefit?

Yes, in terms of the synergy benefits, as you know and we’ve talked about many, many times, it’s not just about the cost of the rig, it’s about the quality of the rig and the performance of the rig, but electrification of those rigs doesn’t really impact that. The electrification of all of those facilities is built into our plans going forward.

Yes, I would say our drive to bring their net zero commitment forward by 15 years, we’ve also built that into our thinking around getting net synergies there, so we’ve comprehended the additional effort required to improve the emissions profile and bring their net zero ambitions forward, so all that’s netted with our synergy numbers.

Thanks, good morning everyone. On the Pioneer acquisition call, you had mentioned that the inventory of the combined companies in the Permian was around 15 to 20 years. Was just curious how that may be split between the Pioneer asset and your Delaware asset, and does it contemplate the accelerated growth rate improves the outlying longer laterals or a potential plateau? I’m just curious to get some more details there, because there was a view of Pioneer having over 20 years of inventory, so any more details there would be helpful. Thanks.

Yes, I think Josh, it’s early stages. I mean, the numbers that we gave and that you just referenced in our initial release are based on our understanding. We’d certainly say that the combined resource for the two companies is order of magnitude 16 billion oil-equivalent barrels - that’s 15 to 20 years life. Most of our resource is, as you’re aware, is on the Delaware side. Obviously Pioneer is exclusive in the Midland side, so that’s the way it is. It’s based on our early assessments.

Well, maybe if there was just any more details as far as what your split may be of that 16 versus what theirs may be.

Yes, I mean, they’re close, I would say in total. Exxon’s is closer to 9 billion, Pioneer’s is closer to 7 billion, is what I would say in total, but that’s based on our initial understanding.

For the resource.

For the resource, yes.

Okay, that’s it.

Good morning, thanks for taking the question at the end. I wanted to follow up on the capital allocation question and the dividend increase specifically. We’ve talked a lot about this in the past, that this dividend increase looks like it’s roughly the same as the amount of the share repurchase in terms of percentage, and I know you’re issuing share for Pioneer but you’ve also got a pathway to a lot of upstream growth and then downstream is growing too, as we learned about in the product solutions spotlight. You’re running with sort of a significant operational cash surplus on a recurring basis, even before this growth, and so just wondering about your thoughts on dividend growth going forward and if we are through this period where you were tending the balance sheet and the portfolio, and now some of this growth will translate to sort of a dividend CAGR that is in line with the operations. Thanks.

Sure, so we have always said we’re looking to ensure we have a dividend that’s sustainable, competitive and growing. I think the increase of $0.04 to the quarterly dividend is very reflective of that. I think it also reflects the overall confidence that we have in the business and the underlying improvement in earnings power that we’ve seen over the last couple of years. I mean, by any metric, this was a really strong quarter, whether you look at earnings, cash, shareholder returns. It was a very strong quarter and we have a great degree of confidence in the business, so we increased the dividend a bit more than we did about a year ago. Obviously we have a cadence now of looking at the dividend in the fourth quarter of the year, and that increase is very reflective of our confidence in the business and our underlying performance.

Yes, I would just add to that, Sam, obviously we view the dividend as a commitment, and as we saw through the pandemic, even when things get tough, we work hard to make sure that we’re continuing to deliver on that commitment to our shareholders. As we think about going forward and the volatility in the markets and the commodity cycle, we do need to make sure that as we think about growth in the dividend, that we also think about sustainability and the ability to deliver on that commitment, irrespective of what the market throws at us. That goes into the equation as we think about that going forward, and when we’ve got additional cash that we want to distribute, we’ve always got the buyback, which obviously as Kathy said, we’re looking to have a more consistent level of that as well. That’s kind of how we’re thinking about it. Thanks for the question.

Thank you.

You’re welcome, and thanks everyone for joining the call and for your questions today. We will post a transcript of our Q&A session on the investor website next week. We look forward to connecting with you again on December 6 for our corporate plan update. With that, have a nice weekend, everyone, and I’ll turn it back to the Operator to conclude our call.