ExxonMobil Stock

Good morning. I'm going to kick off a minute or 2 early. I'm delighted to welcome you to day 2 of the 40th Barclays Energy and Power Conference.

We have a jammed pack day of conversations fireside. So really looking forward to the conversations ahead.

I wanted to kick it off because first, delighted to bring Neil Hansen, the CFO of ExxonMobil to kick us off on this day 2. And we also have some audience polling questions that we wanted to ask you to participate in with the clickers that's right in front of you.

So Neil, why don't you join me on stage?

And let's start with the audience polling questions. You can just correspond to the numbers that you think you believe corresponds to your views.

First question, when do you expect the Straight of Hormuz crisis normalize? So either before midterm, by year-end, first half of next year or now might be the new normal? It won't be interesting to see.

You might be surprised, but this is very similar to how we develop our company plan, just through polling.

Well, it's consensus [indiscernible]. Yes, that's the longer this drag down, it's not surprising.

The next one, please. So given that view, how do you think about where Brent price is going to average next year, the strip this is as of last Friday 79. So 70, 70 to 80, 80 to 90 above 90?

All right. We're still pretty close to strip with a bullish tilt. The last one, please. So over the next [ 12 months ], which subsector of energy do you think has the most upside? Integrated E&P services, refining, midstream and utilities?

All right. It's actually pretty similar to what we were seeing yesterday as well. Well, thank you so much for participating and Neil, thank you for being here and kicking us off. So I know you have some prepared remarks, why don't we kick that off to start.

Excellent. Thank you, Betty. And it's great to be back at the Barclays Energy and Power Conference. Last time I was here was in 2019 when I was the Vice President of Investor Relations. So it's great to be back. And before we get to the Q&A, I just had a couple of slides that I wanted to share with the audience around a few things that we think.

At ExxonMobil, we do really well and that are fundamental to how we create long-term shareholder value. This is our cautionary statement, brief cautionary statement. I won't go through it, but I will be making some forward statements, and we have more information on our Investor Relations website.

So these are three foundational pillars at ExxonMobil that underpin a lot of what we do and underpin our ability to create long-term shareholder value. We also think these are three things that transcend markets. They transcend commodity price cycles. They will enable transition to different energy systems. They allow us to identify new products, and they differentiate us from competition. And importantly, they help us to create long-term shareholder value.

So if you look at each of these three, technology, again, we think this is fundamental to the ability to continue to improve, to continue to identify products that society demands and I'm sure we'll talk about it today. But one of the things we've referenced often is the focus on technology in the Permian.

We've got 40 complementary technologies that we're progressing with the focus on improving recovery and capital efficiency.

Project execution this is a capital-intensive business. And the ability to execute projects well is core. It's a core capability and it is one we think that differentiates ExxonMobil. We are, on average, executing double the number of major projects relative to competition, and we're doing it at 20% lower cost and 20% faster than everybody else.

And then, of course, operations, the ability to maximize the assets that we have and to do that safely and reliably. And we recently centralized a lot of these organizations across the enterprise to capture best practices. And more importantly, really to redefine what we consider to be industry defining performance.

Operations is a good example. When we look at turnarounds compared to the last cycle that we went through turnarounds at our sites. We're at 30% lower cost and we're doing those turnarounds at 50%, shorter duration than we did previously.

And again, those three pillars underpin what we're trying to do, which is to grow long-term shareholder value. And that starts with investing in advantaged low-cost, high-return opportunities. And we feel we're advantaged in that area in terms of the portfolio that we have, and we're capitalizing on that.

And then, of course, once you invest in those projects or as you invest in those projects, the importance of having financial strength, we talk about our strong balance sheet, [ AA minus ] rated. Our net debt to capital, I think, is 11%. This last quarter, we reduced that by another $7 billion. That balance sheet allows us to continue to invest through cycles, through different markets when others have to pull back or they have to cut distributions, we're able to lean in as opportunities arise.

And then, of course, we want to share our success with our shareholders. When you look at the dividend, the dividend for us needs to be sustainable, growing and competitive. And all three of those elements are important. We've been able to grow the dividend for 43 consecutive years now, and that is, I think, 95% better than most of the S&P 500. And then, of course, share repurchases, we view as flexible tax efficient ways to return cash to our shareholders.

So I just want to end with that. Again, I think we're well positioned given the capabilities that we have in technology and project execution and operations. And as a company, we want to be defined by what we do well. not necessarily by the products that we produce. So with that, I'll turn it over to you to Betty.

Thank you. And these three foundational pillars are really differentiated Exxon long term. But I want to start the conversation on the macro front as we are still sitting through the largest supply disruption ever in modern energy market.

As you have -- Exxon has a front load seat to seeing what's going on across the board. So could you tell us in your view on where you're seeing the most resilience in the system? Where do you see the most distressed? What has the price to the moat so far?

Yes. I think a couple of high-level things that we've seen given what's happening in the Middle East. One is it's a stark reminder of the importance of providing affordable and reliable energy and products to the world. And you can see how central that is to economic progress, how central that is to living standards, our day-to-day lives. And I think this has been a stark reminder of that.

The other thing we'd tell you is the market fundamentals for the most part are working. And when you see a supply shock like we've seen in the oil markets, one of the things you're going to witness is a rush to try to increase supply. And we've seen unprecedented levels of release of inventory, both strategic commercial reserves but also strategic petroleum reserves.

You've seen the supply side. You've seen countries like the U.S. and Brazil increased their supply and at the same time, to help offset that, you've seen price play the role of demand destruction. You've seen demand destruction in chemical and refining. And so for the most part, the oil markets have settled into a fairly range-bound price scenario.

We were a little surprised, I think, by the amount of inventory that was available to be released.

On the refining side, we would tell you that's where the pinch point is today. And that is somewhat driven by what's happening in the Middle East, products not coming out, but also the crude that's needed in Asia to run refineries there. But it's also what's happening between Ukraine and Russia. And then we're also seeing the Chinese are not exporting products. And so you're seeing a significantly higher margin in refining.

So when we look at the entire energy system, today, we would tell you that the supply shock and the pinch point really is around refining.

And so what lessons that we learned? I -- again, back to the fact that what we do is really important to society. And then I think you're also seeing the market behave relative to long-term fundamentals terms of supply and demand and how they respond to these types of situations.

I think the market -- everything is just showing really the value of the integrated model because the stress can move from one part of the value chain to another. And you guys talked about the value of supply chains, trading optimization and commercial optimization. Can you speak to how you find maybe the competitive advantage assessed within the integrated model that you've been able to deploy?

Yes. I think what we believe in and have seen is there are benefits to physical integration. And one of the things that we've done over the last few years is to organize ExxonMobil along the value chain. And the reason we do that, one is when you see the end to end of a value chain from feed to manufacturing to logistics to the end consumer, you can see how value is created, which is really important.

And then the other thing we know is that value will shift along that value chain. When I ran the fuels business in Europe during COVID, the value in the fuels value chain was mainly outside the gate on the commercial side and the retail side.

As you sit here today and during the Ukraine -- the start of the Ukraine and Russia war, the value and the fuels value chain was in manufacturing, right? And so just being in a position along that value chain allows you to capture the value as it shifts.

And then to your point, supplementing that with the capability. And we've reorganized at ExxonMobil the last few years to centralize a lot of these capabilities across the enterprise. I mentioned projects and technology and operations. But the other key is leveraging supply chain and trading to optimize the assets that we have, to optimize placement of products into the highest value outlets.

I mean one great example recently with what's happened with the Strait of Hormuz is in refining and chemicals in Asia, not having the crude that we typically use to run those facilities, the ability for us to respond to that quickly, using our technology company and our operations to qualify other crudes that we can run and respond in that manner. Again, leveraging and trading and supply chain to continue to run those assets and provide finished products.

So it's a combination of having those end-to-end value chains and being placed there and seeing where the value is created and then having those capabilities overlaying those value chains across the entire enterprise allows us to capture the full value of integration.

Yes. And I think another differentiation that really shines through this disruption is Exxon's strategy of just investing in growth through the cycle doesn't really matter where oil prices are up and down, you are sticking to your own strategy.

How do you think about that investing through the cycle has benefited Exxon relative to the broader industry? And how does that influence your -- you think about growth or investing in growth for the next 5 to 10 years?

Yes. I think that view -- and the importance of being able to invest through cycles and through different markets starts with the objective we have to grow shareholder value, to continue to grow earnings and cash. And it really starts with being grounded in the long-term fundamentals of the energy system and just a shameful plug, our 2026 version of our outlook of supply and demand for [ Energy and Power ] will come out later this month.

It is the basis on which we develop our plans and our strategies. We're not going to deviate based on trends that are happening in society. We're going to focus on the fundamentals. So it starts with the fundamentals. And then you need you have to have the opportunity set to continue looking at building out the portfolio, you have to have the financial capacity, and we talked about the importance of the balance sheet so that as you go through cycles, you can continue to progress those opportunities.

And maybe more importantly and where I think we are seeing differentiation relative to competition is you have to have the capability. You have to be able to execute projects, you need the technology and you need to be able to operate the facilities. And what we've seen and what we are seeing is starting and stopping in some ways doesn't allow you to continue to learn to continue to improve, to continue to develop the technology you need to successfully invest.

There are other benefits to this. I mean if you're leaning in, in a down cycle, you're obviously going to probably capture lower costs and improve the economics. But it comes back to long-term fundamentals, you have to have the balance sheet. You have to have the opportunities and then you need the capability. And if you pull back at different times in the cycle, it's hard to develop and maintain that capability. And I think we're seeing a lot of space between us and competition at this point in some of those areas around project execution and operations.

And those capability and the technology that you talk about really shine through in the Permian being able to deliver much better higher synergies post that Pioneer acquisition through technology and innovation.. How has that learning change your view on that asset? And how much you think Permian is continuing to grow from here?

The Pioneer acquisition has gone extremely well, probably better than we expected. And when we did that acquisition, we anticipated achieving about $2 billion a year of synergies, and we've been able to double that. And that is a combination of bringing what we do well to the Permian, but it's also learning from Pioneer. I mean there are a lot of things that we did -- they did really well that we've learned from. And so it's really been a best of both approach.

And what we see in the Permian, I mean, is an opportunity to significantly grow earnings and cash at attractive returns. And as many of you know, one of the challenges in the Permian is you're still recovering a fairly small amount of the resource that's in the ground.

And so that's why our organization is focused on developing the technologies to improve primary and secondary recovery and do it more efficiently. And so we've talked about stackable or complementary technologies that were progressing. They're in different elements of that cycle. But the aim is how do we improve that recovery? How do we get more out of the ground at that initial start and then going back in and doing secondary recovery.

Some of those technologies will produce the same amount of volume, but with fewer wells. So we'll see capital efficiency. But the aim is how do we increase the value to our shareholders in the Permian. And our view is the unlock will be technology. And we have, I think, a stated objective of doubling recovery in the Permian. That is the focus and the aim of the technology organization and operations in the Permian. That's the challenge. So how do we find out through technology to improve that recovery.

So our ambitions and our view on the Permian is very optimistic, and our progression to some of these technologies are very optimistic to achieve that objective.

So given the value creation that you're able to extract from Pioneer and then technology and capability, as you mentioned, how does that change or influence your view on M&A opportunities going forward?

Yes. Obviously, Pioneer and the success with Pioneer gives us confidence in the ability to leverage what we do really well with integration and technology and operations and apply that to the Permian or other locations.

We can be a very picky acquirer. And for us, when we look at potential M&A, we have to see an opportunity where we can bring something, one of the capabilities that we do really well and create more value than the current owner.

So it's not about just acquiring volume or acquiring assets. It's doing that in a way where we can leverage our capabilities and again, hopefully, the capabilities of the other company to create more value for our shareholders and their shareholders.

So it has to be -- it really has to be one plus one is three or more. I mean it can't just be a view on getting the assets or getting the volume.

So again, I think it gives us -- I think Pioneer is a really good example of what we can bring. I don't think it changes our approach in terms of looking at things, but being very selective and looking for opportunities where we can substantially increase the value of what currently is there.

Right. That makes sense. Talking about LNG, I think LNG with it is a growth driver within the portfolio. And given what we are seeing in the market today, there's more emphasis than ever on the value of diversification or [ advantaged ] projects. So longer term, how do you balance getting access to the most [ advantaged ] projects, but also having that diversification the portfolio?

Yes. For us, the long-term fundamentals of LNG remains sound. I would tell you, coming into this year, we thought there was going to be near-term length and obviously, with what's happened in the Middle East that's been pushed out for some time. So we're -- again, we see the fundamentals are there. We think we bring a lot to LNG. So we're still very interested.

The geographic diversity isn't a primary driver for us. The primary driver for us is can we invest in a way that we can bring on low cost of supply? Is it advantaged in some way? And or in many ways? And then do we bring high returns to our shareholders. That's the primary driver for us. We would not sacrifice the ability to create value in that way to ensure that we have geographic diverse. It's not a primary driver.

Now it happens to be when you look at our portfolio, we obviously have existing operations in the Middle East, but we're also progressing in opportunities in Papua New Guinea, in Mozambique and then, of course, Golden Pass in the U.S. Gulf Coast. So the portfolio is pretty diversified, but it wasn't with that intent.

And you may have seen in the news here in the last few days, with Total in Papua, in PNG, where we're going to take over operatorship and increase our equity. So our appetite, our interest in progressing these opportunities is pretty high, but it's always going to be focused on and we bring on supply that's advantaged, low cost, high returns.

We feel pretty confident, given our history and our experience to operate in a lot of different complex environments and to navigate complexity like we're seeing today. It's not unusual for us, and so we're less driven by avoiding that, I would say.

No, that makes sense. On Guyana, I think you had -- the company had a milestone with the resetting of the entitlement contractor share this quarter. But it also just shows the amount of value that you guys have created in the country and how quickly you were able to recover that cost.

Can you just talk us through what this milestone means for the project? What does it mean for free cash flow inflection? And if you can going forward, able to recover CapEx faster than that even be actually a good thing for the company?

Yes, it's a good news story, right? I mean the desaturation of the cost bank was not a surprise. It did happen a lot faster than we expected, I think, 2 years earlier, even when you adjust for the price impact. So that is a reflection of, I think, the execution of the projects. It's a reflection of operations and being able to run the existing FPSOs really well. And so all of that accelerated the recovery of those costs which is $55 million. From a company perspective, recovering that capital in a shorter period of time is great news. .

What that means going forward, obviously, is slightly lower in titled volumes. I think we said 100,000 barrels a day starting in the third quarter. But more importantly, what it means is double the amount of free cash flow between 2025 and 2030. So it's really -- this is about value. It's not about volume. And so -- that's always been the focus. We obviously continue to invest.

We've got the fifth FPSOs in the water today in the waters of Guyana. So that's progressing well, and we're looking at advancing the ninth FPSO. So Again, it's progressing well.

This is also -- if you think about it very good news for the government and the people of Guyana in terms of the amount of receipts now that they'll have. And I think it highlights that ExxonMobil is the partner of choice. If you're a resource owner and you want someone to come in and execute a project like this in a way where the costs are recovered quickly and the investments recovered and the resource owner benefits from that more timely ExxonMobil really is the partner of choice.

And we're seeing that play out. Historically, gaining access to resources is more of an open bid type of approach, and we're seeing more one-on-one dialogues with three source owners. Again, using Guyana as the example of what we can achieve. So yes, it's a great new story, not a surprise, maybe a little bit faster, but from a capital return from going forward, this is something that we'll continue to bring a lot of value to ExxonMobil and to the Guyanese.

And given the success in Guyana, like does that change how you -- how Exxon evaluates resource opportunities that you see around the world?

I think we've not I think we -- again, back to the focus on the long-term fundamentals, we've not really deviated at any point in time from a recognition that you need to have continued investment in supply. And that has a lot of ranges to it, right? There's a lot of resources that are discovered but undeveloped and so we will pursue those with the resource owners. That is also the need to continue with frontier exploration.

We invest in the last 5 years, we've invested $1 billion every year in exploration. So we've never deviated from that perspective of you really need to continue to invest, given that, especially in the upstream, the resources declined pretty rapidly, you're constantly in this need to find additional opportunities.

I think what's changed over the last 5 to 10 years is this recognition of resource owners about who operates and who develops matters. And you can destroy a lot of value if you have the wrong operator. I think that dynamic has changed quite a bit. Again, it's opened more one-on-one type of discussions with the resource owners.

Right. No, that makes sense. Shifting gear to the emerging businesses. last year at the conference and Jack talked about the -- really the growth potential that we could see from Proxxima and carbon materials. And that's really going to drive the growth into the 2030s. So how do you think about the scale and the advancing these emerging businesses for Exxon? And anything that has changed over the last year?

Yes. I think Proxxima and graphite are two really good examples of what I talked about at the beginning around the company wants to be defined or views themselves as being defined by the capabilities and what we do well, not necessarily by the products we produce.

And this is a great example of the ability to leverage technology and take the molecules that we convert today into products like motor gasoline and instead convert them into resins. In the example of Proxxima.

And I would tell you right now that it's progressing well. The value and use is being demonstrated, whether that is rebar, where it's lighter, stronger, easier to install or it's coatings, where instead of three coatings, you need only one. I mean there's -- so what we're seeing is the technology is proving out. We recently FID-ed a blend plant to produce more resins. I think up to 120,000 KTA. And so that's progressing well.

Now what you're focused on predominantly is market development and customer adoption, and that is the cycle of building a new business.

Graphite similar. We've -- we're working with OEMs and others to prove out the technology we're seeing faster charging times with batteries. We're seeing more capacity and longer duration and the OEMs are recognizing that.

So in both cases, progressing well, technology is proving out, the value and use is being demonstrated. And now the aim of the organization is how do we get market development and customer adoption. So that's kind of where we are.

But I would tell you, those two are just two examples. We have the organization in a lot of different ways are looking for opportunities where we can leverage our capabilities to create new value chains and new products.

Again, we think because of those capabilities that we have, we're better positioned than anybody to be able to do that.

Yes. And how do you guys like to say, Exxon is an energy technology company. and that's a demonstration of that.

So I want to end with a look out to the 2030s, because know that Exxon is delivering really differentiated earnings and cash flow growth out to 2030, and we have the target. We know that's coming from Permian and Guyana. But you're also working and investing on the next layer generation of projects for as we sit here today, what part of that medium- to longer-term outlook do you think might be underappreciated or that's the most exciting for you?

Yes. I think, first of all, the plans to 2030, the I think, $25 billion growth in earnings and $35 million in cash flow, we're getting closer to '30%, and I would tell you that is only increasing in confidence in our ability to deliver that, which is great.

What's great about it is I think the organization is entirely focused on how do we continue to grow earnings and cash. The world does not end in 2030. And there are a lot of opportunities that we're excited about. You mentioned Proxxima and graphite. Those we talked about the LNG projects that are coming. I mentioned this persistent approach to frontier exploration, for looking for opportunities with resource owners, especially on the discovered undeveloped side.

The other thing that I think we're just now touching on, and we talked a lot about structural savings that we've achieved, a lot of that up to this point has come from divestments.

Going forward, that is going to come more and more from the organization we've designed. And this setting up of these central organizations, operations, project technology, we think, in addition to the new enterprise-wide system that we're putting in place will be a step change in terms of the savings that we can achieve going out past 2030.

So it's -- when we did this 2030 plan that we discussed and disclosed to the market at only 20 months ago. And so it's amazing how quickly the organization has responded to that, and they're responding to the objective of continuing that growth post 2030. And there's a lot of opportunities in the portfolio.

And it will come back to maintaining those capabilities of project execution and technology and operations, having the financial strength and capacity. But the objective is shareholder value and continue to grow shareholder value.

Great. And that's what Exxon is best doing. So with that, thank you so much. Thank you. Thank you for joining us for this fireside Great.

Thank you. Appreciate it. Thank you, everybody.

Good morning, everyone. Welcome to ExxonMobil's earnings call. Today's call is being recorded. We appreciate you joining us. I'm Jim Chapman, and I'm joined by Darren Woods, Chairman and Chief Executive Officer; and Neil Hansen, Senior Vice President and Chief Financial Officer.

This quarter's presentation and prerecorded remarks are available on the Investors section of our website. They're meant to accompany this quarter's earnings release, which is posted in the same location.

During today's presentation, we'll make forward-looking remarks, including comments on our long-term plans, which are subject to risks and uncertainties. Please read our cautionary statement on Slide 2. You can find more information on the risks and uncertainties that apply to any forward-looking statements in our SEC filings on our website.

We also provided supplemental information at the end of our earnings slides, which are also posted on our website.

And now I'll turn it over to Darren for opening remarks.

Good morning, and thank you for joining us. Unfortunately, as all of you are aware, the conflict in the Middle East continued through the second quarter, impacting our employees, partners and operations in the region. I want to begin this morning by recognizing the service of the men and women engaged in the conflict and the hardships being endured and losses suffered by those in the region. They remain at the forefront of our thoughts, and we continue to pray for a quick resolution.

As a company, we remain committed to mitigating the global impact by maximizing production and providing the energy and products essential to modern life. While we didn't anticipate the current situation, we were prepared for it. In our markets, disruption is inevitable. Establishing globally diverse production at scale across value chains built on a foundation of durable advantages provides a robust platform for creating value through price cycles and market disruptions.

The second quarter demonstrates the strength of our approach. Despite the temporary loss of approximately 10% of our upstream production, we delivered exceptional financial results, including industry-leading earnings of $14.5 billion and cash flow from operations of $23.6 billion. Performance was strong across the company.

In the upstream, excluding the Middle East, we delivered our highest production volumes in more than two decades. In Energy Products, our integrated U.S. Gulf Coast refining operations ran reliably as global diesel supply tightened. The business delivered record second quarter diesel production, helping meet market needs.

In Chemical products, our North American facilities with advantaged feed and record first half reliability helped meet the shortfall in supply caused by disruptions in the Middle East, driving a roughly 180% increase in chemical product margins versus the first quarter. In Specialty Products, our integrated approach down the value chain, reformulation capabilities, global footprint and strong execution helped meet customer needs despite significant supply challenges, delivering best ever basestock margins and record quarterly and first half adjusted earnings.

Guyana remains one of the clearest examples of our advantaged growth. In the quarter, Guyana delivered gross production volumes of approximately 900,000 barrels per day. Errea Wittu, our fifth FPSO, set sail toward Guyana in June and remains on track for start-up by the end of the year. The next major step in Guyana's continued development. Longtail is on the path toward final investment decision, and we are evaluating the potential for a ninth FPSO. The success of this development has set a new standard for the industry and frankly, has exceeded our own expectations.

Delivering on tight schedules at industry-leading cost with strong reliability and optimized production has resulted in recovering our capital and cost nearly two years earlier than anticipated, increasing NPV and desaturating the cost bank. This is great news. But as a result, our volume entitlements will change as reflected in our 2030 plan. As always, our focus remains on value, not volume. Turning to the Permian. This quarter, we set another production record of more than 1.8 million oil equivalent barrels per day. More importantly, we continue to improve recovery and lower capital cost through new technologies deployed at scale.

Our industry-leading acreage position supports extended reach development, including 4-mile laterals that drive superior capital efficiency. In the first half of the year, we drilled more than 80 4-mile wells, supported by our Houston-based remote operations center and real-time data that helps ensure safe, efficient and effective execution.

During the quarter, we had to work through some complex conditions. Logistics were tight, supply chains were constrained and customers were short of critical products. Our global trading and supply chain organization put our new operating model to work, optimizing feedstock and product placement, balancing supply across regions and responding to localized disruptions. Those actions kept our operations running and customers supplied and helped avoid roughly $750 million in annual disruption cost through advanced modeling, fleet reallocations, product reformulations and alternate supply sources. At the same time, we continue to make progress on our transformation.

On July 1, we integrated upstream operations into our global operations organization, bringing together approximately 31,000 employees across more than 150 sites in 48 countries. This is an industry-first operating model. The objective is clear: make the most of what we have while raising the standard for safe, reliable and efficient performance across all our assets. With this new organization, we expect to deliver improved margins and industry-leading operations excellence, improving safety, reliability, maintenance cost and turnarounds across the portfolio. We are also advancing our enterprise-wide process and data platform transformation.

As I've said before, this is redesigning end-to-end processes and connecting data, transactions and decision-making across every business, geography and function. Early deployments have gone well, building a strong foundation for larger rollouts in 2027. The work is already simplifying processes, improving line of sight and replacing fragmented reporting with more consistent enterprise data. As it progresses, it will help us learn and act faster, better leverage our scale and accelerate the adoption and value of AI. The value of this transformation is showing up in our results.

Cumulative structural cost savings have increased to $16.3 billion since 2019, with centralized organizations contributing nearly half of the year-to-date savings. Financially, this was a strong quarter with more than $14 billion of earnings, more than $17 billion of free cash flow and a more than $7 billion reduction in net debt. That strength allows us to keep investing in advantaged opportunities, return surplus cash to shareholders and maintain one of the strongest balance sheets in the industry.

Cash capital expenditures were roughly $7 billion, and we returned more than $9 billion to shareholders through dividends and share repurchases. Finally, in the quarter, shareholders overwhelmingly supported redomiciling ExxonMobil from New Jersey to Texas, which we completed on July 1. The move aligns our legal home with our headquarters and where we have operated for more than 3 decades, while providing a stable, predictable and efficient governance framework that supports sound decision-making, long-term value creation and shareholder rights.

I want to thank our shareholders for their support and the quality dialogue we had across the year's engagements. Stepping back, the second quarter was shaped by disruption, but defined by execution. The market benefit was real, and so was the value created by the choices we have made over many years to strengthen the portfolio, lower our cost structure and improve how we operate through deeper integration and technology-enabled execution. That is the point of our transformation. We are building a company that can perform through disruption and deliver superior long-term shareholder value across cycles. Thank you.

Thank you, Darren. Before we move to Q&A, two things to note. First, as a reminder, the Investors section of our website provides further data on our results and operations, and we encourage investors to take a look. And second, I want to highlight that we plan to publish our annual global outlook in September, a comprehensive report detailing our latest views on global energy demand and supply through 2050, which forms the basis of our long-term business planning.

So with that, we can move to Q&A. As a reminder, we ask each participant to keep it to one question and operator, we'll ask you to please open the line for the first question.

[Operator Instructions] The first question comes from Steve Richardson of Evercore.

Darren, I was wondering if we could start on Guyana. Obviously, what we've all known is these are really high-quality projects. Can you just talk about this desaturation point, obviously, in light of cost performance and higher commodity prices and maybe just how the timing compares to maybe what your previous expectations were. Also curious if we could talk a little bit about exploration.

There's a mention in the disclosure about using AI tools and generating prospects. I think people are also curious about what the exploration outlook in Guyana is, particularly as you think about parts of the block that maybe are underexplored close to maritime boundary.

Sure. Steve, thanks for your question. I think as you point out, it's a real success story in what we've achieved in Guyana, delivering, frankly, the production units faster than we had originally anticipated at a lower cost, running those assets above the investment basis. And then obviously, the market prices have been higher than our base assumption. So all that means more cash sooner, which is good for the project, good for NPV, good for Guyana and the people of Guyana.

Obviously, we recover our costs back faster and therefore, desaturate quicker, which is a good story. And I would say we -- that was a moving target as prices manifest themselves as we delivered those units and continue to grow production, we kept updating it. And then based on price forecast, our assessment would be happening later this year, early into next year, and that's obviously come forward now with where prices have been. So I think a really good news story. With respect to exploration, I think, too, another good news story.

We obviously have a large chunk of acreage, which is in force majeure waiting for the ultimate ruling from the International Court of Justice on the Venezuela dispute and we'll see what happens there. We feel there's an opportunity then to start shooting seismic and understand what that acreage potentially holds. And we've got more work to do in the acreage that we've already shot and the work that we've been doing.

I think Neil Chapman had mentioned at a prior conference this year that we really put a lot of effort into artificial intelligence and training models based on what we found already, all the drilling that we've done, the characterization of that subsurface and unleashed that in the rest of the block and have four new discovery opportunities above and beyond what we thought were opportunities. So we're optimistic there.

Obviously, a lot more work to do to confirm those. But I think our view is we're not done yet in Guyana, and we see -- continue to see a really bright future there.

Maybe, Darren, just to add to the comments on Guyana. I think this reinforces why we are the partner of choice, especially for developments of this scale. And if you look at the desaturation, and Darren mentioned the price impact. But even if you took out that price impact, we saw a 2-year acceleration of our investment recovery.

And let's go back to the things that we mentioned. The ability to execute these projects at industry-leading cost and schedule, running the FPSOs at above 98% reliability, optimizing, being able to produce at 100,000 barrels a day above the investment basis. So even without the price impact, we're seeing accelerated recovery of our investment. And as Darren mentioned in his opening remarks, this is about value, not volume.

And going forward, we're going to see 2x the level of free cash flow in 2030 than we saw in 2025. So again, just speaks to the tremendous success that we're seeing in Guyana.

The next question comes from Neil Mehta of Goldman Sachs.

Darren, just love your perspective on the business that you spent a lot of time growing up on the refining system. It's obviously the bottleneck in the petroleum system right now and margins are exceptionally high. So two perspectives on that. One is, how do you see the situation evolving as you think about the products?

And then Neil Hansen, there's probably a question for you on the quarter itself. It did feel like relative to some of the independents, the refining earnings were a little softer than I would have thought. And so maybe there was some -- it was more of a timing or operational things, but how do you see that progressing as we move into the third quarter?

Yes. Neil, I'll start and then hand it over to the other Neil. I mean, as I mentioned this morning, we are a very large refinery, much larger than any of the other IOCs. In fact, we're the #2 in size in the world behind China and outside of China, we are the largest refinery. So we've got a good footprint. And as you know, we have been -- we spent the last 10 years really focused on optimizing that portfolio, divesting refineries that we didn't feel like we could move to the left of the cost of supply curve and then investing in those refineries that we felt like had long-term strategic value and high-grading the yield on those refineries.

So today, we have a portfolio that will be very successful in low-margin environments and then obviously, in higher-margin environments, even more successful. And the organization is now very focused on in the short term, with these significant constraints in product flow, maximizing production and getting the most needed products to the market and meeting customer demands where it's such a critical need today that's not being met. I see that, frankly, the challenge here is, obviously, with the Strait closure, we've got about roughly 3 million barrels a day of capacity that's not available to the marketplace.

China has stopped exporting. There's another couple of million barrels a day of refining capacity that is not available to the market. And then, of course, Ukraine has been pretty effective at taking Russia refining capacity out. And so another 1 million barrels a day or so of Russian refining capacity that in the past was providing product to the broader market. So with all those -- that supply out, we're well below available capacity, frankly, that I've ever seen. If you exclude COVID, where there was no demand, I've never seen the available capacity relative to demand as low as it is today. It's going to take a while for the industry to kind of climb its way out of that hole.

And so from our perspective, we think we're going to continue to see a very robust refining market with very high margins. And of course, our job will be to continue to push as hard as we can to maximize production and try to meet that need because we do recognize that these high margins lead to high product prices, which we also know has a significant impact on consumers and people's pocketbook. So we're doing our best to put as much product out there as we can. And I think you see that in the results.

I'll just touch on the mix issue and what you're seeing at other refiners versus ExxonMobil. Nobody has the portfolio that we have. Nobody has the mix that we have. Nobody has the geographic footprint. So there's a lot more mix and variability that kind of happens around the market than maybe a stand-alone U.S. refiner or some of these more narrowed refinery companies. But with that, I'll see if Neil has got anything else to add.

Yes. Let me -- maybe before I get to your question on the quarter, talk a little bit about the energy products business. And you look at what we've done over time in terms of investments in our refining capacity, improving the complexity and taking advantage of the scale of our footprint. The portfolio high-grading that we've done and then the day-to-day efforts that we put into place to optimize throughput and capacity and all those things, combined with the growing capability in trading really has resulted in a step change in earnings in that business in Energy Products.

In fact, if you look at the contribution from Energy Products to our overall business line earnings, it's gone from about 9% to about 23% in the last 5 years. So that increase just speaks to the investments we made. It speaks to how well we're running and speaks to the trading capability that we've built. And operationally, we ran really well in the quarter. You look at the U.S. Gulf Coast refineries, the reliability exceeded 95% in the quarter. So again, we feel really good about what we've done to strengthen that business over time and how we operated in the second quarter.

I think when you look at the quarter relative to consensus, I think some of that is, as Darren talked about, I mean, there are a lot of moving parts, especially with the volatility and the disruption that we saw. So I think that has an impact on projecting some of those refining margins, but no underlying concerns with how that business has performed, and we're benefiting from the investments and how we're operating in Energy Products.

The next question comes from Arun Jayaram with JPMorgan.

Darren, I was wondering if you could help us understand what you're seeing on the ground in terms of the Strait of Hormuz. Perhaps you could highlight what you saw in July, just given the disruption impacts. And I guess my overall question as well, I wanted to see how you're thinking about with your partner, Exxon's intention to invest in the repair of the two Qatar LNG trains, if you come up with your partner on the plans to repair those facilities.

Yes, sure. Arun, thanks for your question. I don't think I have a lot of additional perspective on the ground with respect to what's happening in the Strait. I think it's fairly well covered in the media. And frankly, any discussions I tend to have with the administration is more focused on our perspective of the market and the implications of the constrained supply and how that will manifest itself. I will say, as a big supplier in the marketplace, it is ultimately down to the shipping companies and the crews on those ships to make those transits.

And I think the more volatility there is, the more back and forth with respect to disruptions and attacks, you create more uncertainty, more concern and therefore, less willingness to transit. So I think there's going to be a continued inhibition for movement, which will -- even once we get things cleared up, I think it will take some time for folks to gain some confidence there to continue to ramp things back up to a very high level. And frankly, we're prepared for that with respect to what we're trying to do.

With respect to the broader question, our presence there and the work that we're doing with Qatar, I just come back to the medium- to long-term fundamentals, which the world needs the resources in that region, and it needs to have the Strait open and transiting back at levels it was prior to this conflict. And so we're convinced that, that will come to be at some point in the future. I can't really predict when it will happen or exactly what it will look like. I just know that it's too critical to the overall health of the world economy and for people's -- to meet people's standards of living to have that disrupted for perpetuity. So it will come back. It will be needed.

We've got a long relationship there. We value the partnerships we have. We're in dialogue with Qatar Energy. I think we have a significant role that we can play to bring our expertise to help expedite the repairs. We're in discussions with QE about that. And frankly, looking for the best approach there where, obviously, Qatar Energy and the people of Qatar benefit and ExxonMobil benefits as well. And so I think the one thing I would say about our long, long-standing relationship with Qatar Energy is they recognize the importance of win-win solutions and certainly very focused on how we figure out the path forward here to get production back on and flowing as soon as we're able to.

The next question comes from Devin McDermott of Morgan Stanley.

Darren, you highlighted really strong non-Middle East upstream production in the quarter, the highest in over two decades. You talked a little bit before about Guyana. One of the other drivers of growth is the Permian. You had volumes hit 1.8 million BOE a day in the quarter, in line with your full year guide. I know that this year marked a big step-up in some of the use of advanced proppant and other new technology. And I was wondering if you could just give us an update on how that's progressing versus expectations, specifically as it relates to capital efficiency and recoveries that you're seeing there across the basin.

Yes, sure. Thanks for the question, Devin. And you touched on, I think, one of the really important variables there, which is all the progress we're making with respect to the technology portfolio. We've been talking for some time now that we've got 40-plus technology developments that we're working and have been going out and trialing in the field. And the value of those technologies are -- most of them are stackable so that you keep building on the success and drive more and more recovery, fewer wells, so less capital. And I'd tell you that, that portfolio continues to exceed expectations for the technologies that are successful.

So I put out a challenge back in 2018 for doubling recovery. We have an opportunity set that will do more than that. And when you risk it for all the uncertainties associated with that portfolio, we're getting really close to that objective. And it's just a function of continuing to deploy those technologies and getting it to a critical mass to where it's transparent to the rest of the market as we continue to bring into new production, new wells. So I feel really good about that. I'm really confident in what the team is doing, a lot of energy and motivation by the technology organization and our Permian organization to deploy the technology and to see the benefits of that. So we're more than on track.

Yes. I think Darren, maybe just to add to that. I mean, there is a lot of excitement around the technology that's being developed and will be deployed. But I think you can easily look past the expertise and the technology that's already being used in the Permian. You look at things like extended reach laterals. I mean we're leading the Permian and long lateral development. I think in the opening remarks, we mentioned 83 4-mile wells that we've drilled year-to-date. But if you look back and you look at all the Permian producing wells since 2020, anything above 3 miles or longer, we have 1,200 wells.

I think our nearest competitor is around 400. And you would have to go to the next 6 competitors to get to that same level of 1,200. So you look at the extended reach laterals, surfactants, AI, machine learning, all of that is contributing to very strong performance even before we start to deploy some of these other technologies.

The next question comes from Doug Leggate of Wolfe Research.

Darren, I hate to beat on Guyana. I wonder if I could come back to Guyana and a couple of clarification points or maybe more than that perhaps. So I think there's some confusion between production entitlement and free cash flow. Maybe it's for Neil. But I wonder if you could just opine on although your production entitlement goes down, what happens to your free cash flow? That's my first kind of part of that. And I guess I can't help but notice Phase 9 is now part of the story. What is your latest thinking on gross production sustainability through the end of the decade, maybe a little beyond that?

Yes. Thank you, Doug. I'll let Neil talk a little bit about the free cash flow portion of the question. I would just say we're going through our plan process currently, which we will finalize as we get to the end of the year and then come out and talk about it as part of our corporate plan update. And as part of that, every year, we revisit what are the opportunities, what progress have we made, how is our thinking developed. And indeed, one of the things that we now see an opportunity for is this ninth FPSO and really take advantage of what we've done with Longtail to replicate that and get some significant capital advantages to apply.

So our view is that's looking promising. We haven't finalized that, obviously, but we're progressing and it looks pretty attractive at this stage. I think longer term, we've got more work to do. As I mentioned one of the earlier -- responding to one of the earlier questions, there's a lot of acreage yet to fully take advantage of. And so we're continuing exploration, continue to look for opportunities. I mentioned that with some of the AI tools that we've trained with what we've already found in the drilling we've done. We've seen some new opportunities to explore that we hadn't previously identified.

So I would tell you this thing, the tape hasn't run out on this play yet, and we're going to continue to evaluate that and see what we can get from it. But I mean, you can rest assured the organization is very focused on maximizing the value of that acreage for the benefit, obviously, of ExxonMobil, but more importantly, for Guyana, government of Guyana, people of Guyana. But I'll let Neil talk a little bit about the free cash flow question.

Yes. Let me try to answer your question, Doug. So again, as we mentioned, at this point, we fully recovered the $55 billion of investment along with all the operating costs. And the way the contractor agreement works is we can recover that investment up to 75%. After that, the remaining production is shared 50-50 between us and the government of Guyana. And so if you think about -- if you just stop today and there's no additional investment, then more of your production and revenue is going to flow towards cash flow, again, shared between us and the government of Guyana.

The reality is we have more investment. To the extent we have the investment come in and operating costs, it will still go into the cost bank. We'll still recover that at that 75% cap, but there's much less investment to recover. And given the level of production that we're at, you're unlikely to see that cost bank obviously be full again. And so you'll just have more cash flow above your investment and above the operating cost. Now that obviously is a question of what you think price is going to do going forward in addition to the investment and cost that we'll be putting into the cost bank.

So hopefully, that helps. But we would anticipate, and I think we showed that in the slides that now that we've reached full recovery of that significant investment, more of our revenues will go towards cash flow -- free cash flow versus recovering cost and investment. Hopefully, that helps, Doug.

Neil, just to be clear, so is it fair to characterize this as an inflection in free cash flow then as opposed to a decline in production entitlement? That's a reasonable way to frame it.

That's very much an inflection into free cash flow. Absolutely. And this -- for us, Doug, and I'm sure for you as well, this is about value. It's not about volume, right? Even though there's a slight decline in the entitled volume, the focus we have is on the value that we've created for ourselves and for the government of Guyana. And at this point, there's an inflection to where you're going to see a much larger amount of free cash flow come in. It is -- it's a very positive, exciting story.

The next question comes from Betty Jiang of Barclays.

We're seeing an increasing number of resource-rich governments looking for partners to accelerate the development of their resources. And as Neil said earlier, Exxon's track record is really positioning you guys as a partner of choice. I imagine these are large-scale, long-duration resources but can also come with different set of risk. How do you evaluate these opportunities for Exxon and their competitiveness relative to what you already have in the portfolio?

Sure. Betty, I'll take that and then see if Neil wants to add anything to it. So I'd come back to the fundamental investment thesis that we have across all of our businesses is the projects that we pursue and ultimately advanced have to have an advantage versus what others in the industry can do. It has to -- we have to be able to drive the cost of supply to the far left of the cost curve so that the supply cost curve so that we know irrespective of where the market goes and the ups and downs in prices and margins that we'll have investments that generate above-industry returns. And that's been the philosophy across every business that we have and all the projects that we evaluate.

And results of that are manifesting themselves today and all the investments we made over the last 10 years, that's not going to change going forward. And so I'd say, first and foremost, as we look at new opportunities, you got to clear that hurdle. Do we bring an advantage? Do we end up with a project that's advantaged versus the rest of the industry? And is it at a very low cost of supply and therefore, generate above industry returns. And I think that's the criteria that all of our businesses are driving towards. And then, of course, when it comes to specific areas and risk -- country risk associated with those areas, the market tends to decide that.

And so our view is we will generate projects that realize the risk premium associated with any projects in some of those areas consistent with the rest of the market, and then we'll add to that with our advantages. And then the final step is making sure that we manage that risk in the portfolio. One of the advantages of being large and having a very diversified portfolio is we can diversify out of specific risk. So we don't have to bet the farm on any one location or any one place. And we keep a very close eye on the overall exposure of the portfolio and look at how that's developing. And as we make investments, is that portfolio risk changing significantly or not.

So that's how we do it. What we've seen to date, you see it today with some of the disruption in the Middle East, you saw it several years back with the Russia disruptions that the portfolio is robust to some of these unexpected events, and that's how we'll manage it.

And Betty, I think you're absolutely right. I think our track record and a recognition of our capabilities certainly is leading us to being the clear partner of choice. And when we talk about that, you look at being in a capital-intensive business like we are, it's the ability to execute large-scale projects, leverage technology and then operate at a very high standard and a very high level. And if you look at just the ability to execute projects, we're doing about twice the number of mega projects in our nearest IOC, and we're doing it up to 20% lower project costs and our project delivery schedules are 20% faster than industry average.

So I think it's -- when you look at resource owners, I think there's absolute recognition of that capability, that track record of being able to do those 3 things really well. And then as Darren mentioned, I mean, when we look at any opportunity, obviously, we look at the terms, but more importantly is, can we bring something unique and different? Can we leverage those competitive advantages to provide an outsized returns for our shareholders. So that's kind of how we think about it. But we are in a, I think, in a nice position with resource owners given what we've been able to accomplish in places like Guyana.

The next question comes from Bob Brackett of Bernstein Research.

I'm struck by the combination of lower base volumes on the Energy Products side amidst record diesel production. That diesel production could be cyclical, you're planning set points or whatnot or it could be structural. And I suspect it's structural. You all will continue to break that diesel production record over time. And sort of a quick follow-up. How did you decide around scheduled maintenance and choices around deferring scheduled maintenance and maybe grabbing opportunistically some better product prices?

Yes. Bob, I think one of the things you hit on is this drive we've had across our portfolio to continue to high-grade the bottom of the barrel, the low-value molecules into higher-value molecules and distillate, obviously, is one of the higher-value, in-demand molecules that come out of our refineries. So if you look at what we've been doing over the last 10 years with investments in Antwerp, investments in Rotterdam, the investments that we've made in Singapore to upgrade these low-value molecules and as a result, get more distillate out, that is a continuing focus.

And in fact, we have a number of projects in development and slated for what we're doing in the Gulf Coast to continue that trend and to continue to grow distillate, jet, and basestock production. So that is a clear theme, and it makes our refineries, frankly, lower-cost suppliers and higher-margin facilities, which is a clear focus. If you look at just what we've accomplished here in the last 3 years, our global throughput is up 11% and the production of jet and diesel is up by 15%. So it is reflective of the work that we've been doing.

Anything to add to that?

And Bob, I'm not sure what time frame you're looking at. But certainly, there's an impact from planned maintenance and turnarounds in the quarter. And there's a number of scheduled maintenance activities that we have completed this year, and that's had an impact, obviously, on volumes. And we've done everything we can certainly to consider the current refining margin environment if we can safely defer some of that, that's certainly been part of the consideration. And I think why you're seeing such strong performance on utilization. I would just say, though, and I think it's back to the benefits of the centralized organization with global operations.

The turnarounds we have completed this year, what we've seen relative to the last time we did a similar turnaround or in the previous cycle, we've seen a 30% improvement in cost and a 60% improvement in duration. So harder to see, but that certainly helps us to ensure we're not leaving anything on the table in this type of environment is when we do execute those turnarounds, we're executing them at leading edge, certainly in the first quartile.

The next question comes from Biraj Borkhataria with RBC.

It's on the downstream. And Darren, you've been -- spoken about EU policy in the past and some comments today as well. I don't want to get into the debate on that. I think we share the same view. But as of yesterday, one European country approved windfall taxes effectively on the downstream. And given what's happened to oil product prices and refining margins, it seems like this will be a growing theme. You've got 850,000 barrels a day of refining between U.K. and Europe. So I was wondering, I assume you've been in contact with the policymakers. So have you had any discussions on this topic? And how likely do you think that this will be put in place?

Yes. Thank you, Biraj. I think there's a huge temptation all around the world to deflect attention to the bad policies that governments have been implementing over time and scapegoat the industry. And the reality is we saw a long time ago with the emphasis that Europe has been putting on, frankly, deindustrializing their economy and shutting down refineries that there would come a point in time when they would be short product, and we see that today.

And so any time you get into an environment where demand spikes and there is a shortage of supply versus demand and it's trying to be met, that refinery margins will rise and those who stayed in that business and tried to improve that business to be successful across the cycle will make money. Penalizing the businesses who've stood by those countries and provided that product going forward is very shortsighted. And leads us from the past windfall profit tax to invest even less. So we canceled investments that we had planned for Europe based on the last time they passed the windfall profit tax. And in fact, pursuing the -- because we don't think that's a legal taking for the industry. I think the discussions I've been having with many of the leaders there recognize the problem with that approach and the consequences -- the unintended consequences of that approach.

So they're sensitive to it. I'm not sure that's going to keep them from trying to address concerns of their base, but we'll have to see if any of that actually manifests itself in real policy and regulation. If it is, it's just another great example of misguided policy that ultimately is going to inflict more -- higher cost and lower standards of living on their population. I hope at some point in time that the European population wakes up to the very poor policy decisions being made there.

The next question comes from Jean Ann Salisbury with Bank of America.

There are many gas pipelines coming on in the Permian starting now. A lot of investors, including us, think that it could lead to a shift to materially more gas and NGL growth out of the Permian as operators are no longer making decisions around constraining their gas-to-oil ratio. As the largest operator in the Permian, do you anticipate your gas volumes or gas-to-oil ratio in the Permian will inflect as a result of the new pipe?

And we have a very similar assessment as you do with respect to the balances on piping and that market will now clear, and we won't see the disconnects that we've historically seen. I don't -- my sense of things is, and I can't speak for the entire industry, but as we're developing wells, we're looking at the economics, and there's a clear incentive to have higher oil production. I think that's been, I'd say, a general trend within the industry as you look at economically maximizing the value of every well, you want more oil and less gas given the constraints in the gas market.

And I think that's not going to change. My sense would be you get more into -- if you've got the takeaway capacity, it just opens up your ability to produce more oil and the gas then comes with it. And so we may see some additional gas come on to the marketplace associated with that. But the real driver will be unconstrained takeaway capacity and maximizing oil production.

The next question comes from Jason Gabelman of TD Cowen.

I wanted to go back to the Middle East footprint and specifically on the LNG side. I think you have over 2/3 of your LNG portfolio primarily in Qatar. And as you assess the changing risk profile in that region, are you looking to either accelerate LNG projects into your queue to help diversify away from the Middle East? Are you evaluating more closely external opportunities? Or do you feel pretty comfortable with your LNG risk exposure?

Yes. Thank you, Jason. I guess I'd start by just saying we're not extrapolating current events to kind of a long-term change in the stability of the region. As I said earlier in the call, ultimately, the world has to resolve the conflict there and get to a stable situation where those critical resources in the region find a way to the market in a reliable way. And so I think ultimately, there's a solution that the world will arrive at. I couldn't tell you exactly when or what it's going to look like, but that -- those resources are just too critical to the overall economic health of the world for them to stay offline or for them to be unstable.

So I would say that's generally how we think about it. If you look at our portfolio of opportunities in LNG, it has, through the opportunity set that we have, diversifying our production away from the Middle East just based on where the opportunity set is. And so Mozambique, we hope to FID that project later this year. We've got Papua and Papua New Guinea that we look to FID later this year. We've got Golden Pass coming on. So I think continue to see opportunities and very large opportunities that are on the left-hand side of the cost of supply curve coming online. So that's going to achieve some diversification. But I would also tell you that as we continue to look for future opportunities, given the important role that natural gas is going to play, we won't shy away from the region.

The next question comes from Manav Gupta of UBS.

I wanted to go a little bit into Specialty Products. What's the margin environment looking like? Because lubes are extremely tight right now. Lubes margins are uniquely high, and you do have a strong base stocks business. And then also wanted to understand how Mobil 1 is tracking? And any further updates you can give us on Proxxima, how the traction with new clients is going on Proxxima?

Sure. Thank you, Manav. Well, I'd say the specialty business is no different than any other sector business that we have, which is significant supply disruptions, significant challenges with meeting the base demand and basestock is clearly where it starts, particularly given the importance of Middle Eastern crude with respect to basestock production. And so one of the advantages that we've had is with the investments that we've made both in Singapore and in Rotterdam, synthetic base stocks that we can make open up the crude slate and give us opportunities to make base stocks with less dependence on Middle East crudes versus some of the more traditional extraction methods.

So I think we're more robust to that disruption, but clearly, the market is tight. We're leaning in as hard as we can with respect to basestock production, and we're seeing the benefits of that with the high earnings that we made in Specialty Products. We're also quite advantaged with respect to the value chain that we participate in and being part of base stocks. Obviously, running the refineries, running the basestock production, running that base stock marketing business down to finished lubes, coupled with the technology organization that we have, a lot of work the organization has been doing around reformulating to kind of find ways with the available molecules that are out there to meet customer demand, and we've been very successful with that.

So that ability to respond to the constraints and the challenges and find better ways to continue to meet customer demand is paying off as well. And so I think we see the business that we've established there and our participation along that entire value chain really paying off this quarter. And our expectation is as that Strait remains constrained, we'll continue to see a big benefit in our specialty businesses for having that integrated approach to running that business. With respect to Proxxima, I would just say we're progressing the investments to expand capacity like what we're seeing there. The size of that market is huge and all the applications that we've been testing, the work we've been doing continues to demonstrate a very high value and use for our customer base.

So we've got the [ 35,000 kT expansion -- 35 kT expansion ] that's come online. And then we've FID-ed the next large step in our Proxxima blending plant earlier this year. And so we see a big opportunity. It will take time to kind of realize that opportunity because you're obviously starting a brand-new market, a brand-new product for some very attractive markets. But we see -- again, the customer feedback says there's high demand for that. It will just take time to penetrate, but we see a long-term attractive potential here.

And maybe just go back to Specialty Products. I think for the reasons side of the investments that we've made, including the Resid Upgrade project in Singapore last year, which allows us to continue to grow high-value products. For that business, Specialty Products, it was a record earnings for the quarter, and it's also record earnings for the first half of this year. So again, that just demonstrates prices certainly were supportive, but it's all about those advantaged investments we're making. The focus on growing high-value products is clearly yielding very strong results for Specialty.

The next question comes from Sam Margolin of Wells Fargo.

This is on the structural cost savings, you've made tremendous progress, but you have been fighting inflation. And it looks like there's some environmental drivers that are potentially adding some more friction. Is there -- can you talk a little bit about the way that the mix shift in your portfolio and the development of major projects in the life cycle that you're at today might influence this cost-out progress? It feels like as you enter like these new phases of free cash flow sort of oriented phase in Guyana and you bring on fewer developments at a time simultaneously, there may be some levers to offset the inflation impact. But in any case, I would just love your thoughts on that whole trend.

Yes, sure. Thanks, Sam. Thanks for the question. I would just say maybe just step back and talk a little bit about the philosophy that we started back in 2018, which was we knew we wanted to grow the business. We wanted to make these investments and recognize that as we did that, that as you start new facilities, bring new projects online that you incur more operating expense. And as you develop new products to go into new markets, you're spending money on R&D and basically incurring more operating expense. So we recognize the path to growth meant additional operating expenses.

And the challenge that we gave ourselves in the organization was to recognizing we needed to do that to grow earnings and cash flow that we had to find a way to offset that cost, and we weren't going to let our expenses rise. And the only way to do that is start figuring out structural cost savings and driving structural cost out of the business to make room for the additional spend that we knew would come for doing high-value accretive projects and product development. And that's exactly what we've been doing. And so -- the cost savings have come, I'd say, primarily through the transformation we've been driving into the business and creating the value chain, giving organizations a clearer line of sight and more direct accountability for end-to-end profitability. That puts a very high focus on operating expenses.

The synergies that we're capturing through the consolidations that we're making in the centralized organizations are driving huge value and cost reductions. And I would tell you, we just announced on July 1, the formation or the completion of our global operations organization, where for the first time in the company's history, we have all of our operations in one organization, which, again, will open up opportunities to identify efficiencies that have been implemented in some parts of our portfolio, but haven't been spread across the whole. So we've got a long ways to go on, I think, structural efficiencies. And that's not even bringing into account the ERP system that we're developing, which I think, again, will unlock a lot of opportunities.

So our job is to keep driving down these structural costs to make room for the additional expense that comes from the -- from growth. We don't limit, frankly, our growth or the projects that we pursue based on trying to meet an artificial overall cost target. We have a very clear and separate objective on growth and a focus on cost and cost efficiency, and that continues, I think, to play out very well. I think if you look at our cash cost from last year versus this year and ignore production taxes and energy prices, we're basically holding cash costs flat. So we're basically offsetting the inflation that's out there and that's the objective here.

Maybe just additional point on that, Darren, just to demonstrate the progress that we've made. Darren mentioned the year-over-year comparison. But if you took our cash expenses this year and you just annualized it, our cash OpEx would look even with 2019. And again, that's with all the growth that we've had. You mentioned the inflationary impacts. I think it just demonstrates the hard work and the focus that we have on removing costs across the enterprise. And that's regardless of the market conditions, that's regardless of how much we make in a specific quarter.

And it also, as Darren mentioned, demonstrates the power of the model that we have. And again, we're at $16.3 billion cumulative year-to-date, and we plan to get to $20 billion by 2030. So again, really good progress, and it's pretty impressive to see how we've been able to offset some of the impacts that you mentioned, Sam.

We have time for one more question. Our final question will be from John Royall of Piper Sandler.

So we've seen some news flow over the past couple of months about talks of an expansion of the Kashagan project in Kazakhstan. I was hoping maybe for some thoughts on where you are in those discussions and what a project could ultimately look like there.

Yes. John, thanks for the question. I would say, obviously, a huge opportunity, we think, in Kazakhstan to optimize what's been going on there and to help the government achieve its objectives of growing production, growing the benefit of their natural resources for the benefit of the Kazakh government and the people of Kazakhstan. But we're very early in those conversations. I think many of the companies involved in the business there are engaged in discussions.

We've got some hurdles to clear and some short-term issues with the government and then continuing to look longer term around the different options available to the industry broadly and more specifically to ExxonMobil in terms of what we can bring to bear to help achieve ultimately the government's ambition of growing production there and growing their revenues. But I would say it's -- we're too early in that process to give you much detail on that.

Thank you, John. And thanks, everyone, for joining this call. Thanks for your questions. We're going to post a transcript of the call to the Investors section of our website by early next week, and have a good weekend.

Good morning, and welcome to the second day of the 42nd Annual Bernstein Strategic Decisions Conference. I am Bob Brackett, co-Head of America's Energy and transition and global metals and mining.

We are not expecting a fire drill or any sort of test. If the alarm rings, please take it seriously. Your primary exit is out the back door down to the right where I am pointing to the escalator area where you likely came up this morning down to the first floor, exit to the street and wait further instructions. If for any reason that path is blocked, there's a series of internal stairwells that you can choose. They'll take you down one floor to the ground floor and follow the lights there.

Ultimately, this is your conversation. We call it a fireside chat. The way you can contribute and engage in the conversation is through the various blue pieces of paper that are scattered around the room. It has a QR code that gets you to the Pigeonhole app that allows you to put your questions into the queue.

While we wait for your questions to come in, Neil and I will have a conversation that's very much like a pyramid. We will start at a high level with macro questions, move down to how that macro informs strategy, talk to operations and then we have time to get into technology and exploration and all sorts of good things.

With that, I welcome Neil Chapman, Senior Vice President of Exxon Mobil. And I believe he has a few slides to share before we kick things off.

Yes, Bob very, very briefly, and I'll just be maybe 3 minutes, if that's okay, and then we'll get into the questions. In the last 6 years, we've rewired, reengineered, reorganized this corporation. We believe we've set ourselves up in the right place to address what we regard as a dual challenge.

The world needs more energy, it needs more affordable energy, it needs more reliable energy to meet the growing needs in the developing economies and, of course, in this country for data centers, for example. We've done that by leveraging the core competitive advantages of this corporation.

So very, very simple. The scale, we're the largest. Execution excellence. We have the strongest, most reliable operations. We have the safest operation. And critically in a capital-intensive business, we execute major projects better than anyone else in the industry, on time, on budget and first quartile. We're a fully integrated company. We're balanced between fuels, refinery, chemicals and the upstream. That gives us tremendous flexibility, and it's unique in our industry.

And then the third advantage is technology. Every strategy of every business in ExxonMobil, the foundation is our proprietary technology. Those are the advantages. And over the last 6 years, why we did that restructuring and organizing. We've taken $15 billion of structural costs out of the business. Let me just put that in perspective, that's more than all the other IOCs combined. We've divested $25 billion of less economic end-of-life assets.

And through doing all of that, we've replaced these less economic, less growth potential assets with the strongest growth potential, well recognized, in the industry, development potential. We've grown cash flow and earnings at double-digit levels each year through the last 6 years. 18 months ago, we laid out our plan to 2030. And what we said was we will continue to grow cash flow and earnings, double-digit levels, annual growth rate through the next 6 years to the end of the decade, all of this at constant prices and constant margins.

And just to illustrate the point, in the upstream by 2030, ExxonMobil will be producing 5.5 million oil equivalent barrels per day. We don't have records that go back far enough to be at that level. Historically, our company, as most people in the room will probably know, we've been 3.7 million, 3.8 million oil equivalent barrels a day. We're already close to 5 million today, will be 5.5 million at the end of the decade.

Critically, it's not just about growing volume. On constant prices, our earnings per barrel in 2030 will be 3x on average what they were in 2019. So we've done a lot to restructure this business. A lot of people say to me, okay, I've seen your plan to 2030, what goes beyond there?

Well, we haven't issued a plan for 2030, but our Chairman has indicated on multiple occasions. We would expect, we anticipate we have the potential to continue on this growth trajectory well into 2030s. So that's what we've been doing as a company. In terms of shareholders, our dividend, we've grown dividend each year for 43 years. Our total dividend, I think it's the second largest in the S&P 500. It's not second, it's right up there.

We've bought back $20 billion of shares last year. We're on plan to buy back $20 billion of shares this year. And you can see the earnings potential 13% per year between now and 2030. It's unmatched in our industry. There isn't any other company in this oil and gas and petrochemical industry that has anything like that kind of potential in the next 6 years.

That differentiates us, Bob, than the others. Clearly differentiated versus the other IOCs. And I think importantly, if you benchmark that kind of data versus the large cap industrial companies, we're right up there with the very best, if not better, than all of those. I've gone over 3 minutes, but hopefully not too much over...

Fantastic. And it is funny. The oil and gas industry plans on a period of time, 2030 is fairly well baked for you all. You know what you'll be doing. 2035, you sort of know what you're doing, and you'll let us know in 2030, I think every semiconductor in the market today will be obsolete in 2030.

Absolutely.

Every AI tool in the market today will be obsolete in 2030, you know what you'll be doing. Today, in terms of the macro, I don't know what we're doing. Well, let's start with people, which is roughly 20% of your volumes come or produced with west of the Strait of Hormuz and perhaps 15% or so move through historically the Strait of Hormuz. That means you have operations, you have people, you have friends on the ground. What's the situation there?

Well, let's put the volumes in perspective. Obviously, Strait of Hormuz closed. We have a big position in Qatar in LNG. We have a big position in the Emirates, in Upper Zakum with our partner, ADNOC. Total, it's about 15% of our upstream production from those 2 assets flows through the Strait of Hormuz.

We still have people on the ground there today. We are part of an operator. We're a joint venture operator in both assets. We did take a lot of families out safely. Actually, if you go into Doha, it's pretty much business as normal. I myself was there during the middle of this. And so in Doha itself, the malls are full, the streets are full. Hotels are empty. Airport is empty. But it's pretty much business as normal.

And then if economics is the allocation of scarce resources, we have a scarce -- we have 2 scarce resources. We actually have more, 2 that are relevant for us. And normally, economics is fixed with free market prices or with the hand of the state policies, what is happening -- why is petroleum economic seemingly broken? Why do we see $90 on our screen in a world where we've disrupted this level?

Well, I think most people don't really appreciate what's happened. You take arguably 11 million or 12 million barrels a day of crude oil out of the global market. The market is about 100 million, 103 million, 104 million barrels a day. Normally, you'd see prices go through the roof. So what's happened to mitigate that?

Well, first of all, the Saudis maxed out on their East West pipeline. So they're running 5 million barrels a day of crude from the east to the Red Sea and that obviously, you can get into the global market. I think what people appreciate less, there was a lot of sanctioned crude oil on the water. In other words, unsold. Iranian, Venezuelan -- Venezuelan, Russian crude was -- and that has now gone to the market, and that's mitigated some of the loss of oil through the Strait of Hormuz.

Most importantly, though, is what's happened to inventories and this really is a telltale for what could well happen in the coming weeks. Commercial inventories of crude oil, of liquids-linked petroleum, gasoline, diesel, jet fuel, they've all run down and running down those inventories as mitigated or offset supplemented by the release of strategic petroleum reserves, which most of the Western countries have done.

All of that has mitigated the impact. You can model this. We've modeled it. I think a lot of people in the industry have modeled it. We're approaching unheard of inventory levels. I mean, really, really low levels. You can debate whether that's going to hit those really low levels in 2 weeks or 3 weeks. But once you get to that point, then you'll see price shoot up. And I think dated Brent, most people will have modeled, would say dated Brent will shoot up.

Once you get to that really low inventory level up to $150, $160, the models would tell you that. And then what happens is when the price gets to a certain level, demand destruction brings it back into balance. Prices go so high, it becomes unaffordable and that's what happens. And so we're at that level right now, and I think crude being in the sort of $90 to $110 for the last whatever it is, 6 weeks has really been mitigated by running down inventories. Can't last forever. So we'll see what happens. Predicting this and the exact timing, it's always a challenge, but that's the way we see the picture.

Yes. To be clear, you're talking about price signals, very high-priced signals coming in 2 to 3 weeks...

The order of magnitude.

Order of magnitude, and that is informed by a global crude oil and refined products trading organization, right. So you talk to that organization, basically talk to the knowledge base, which informs what you just said.

Historically, Exxon has not been in the trading business, but we built a trading organization over the last 5 years. So what you really see is we have the most -- the largest footprint in the oil and gas business around the world. We were pretty much in every country. We have assets, we have logistics, and it gives us tremendous insight. It doesn't just give us arbitrage opportunity. It gives us insight on where vessels, where opportunities are.

We've built that trading organization largely by bringing in experienced traders at the same time as training our own organization. So we have an extensive trading organization in Houston, in London and in Singapore. But those insights come from having the largest footprint in this industry around the world. I don't know, Bob, whether it's 2 to 3 weeks or 3 to 4 weeks. What I'm really saying is it's -- once you get to the minimum inventory levels and all-time low inventory levels, there's only one way to go. That's the situation.

Very clear. It's vaguely apocalyptic.

We know I'm a terrible predictor of price. So I'm not going to do that.

Move to LNG then right? So it's a similar scale of disruption coming into summer power demand, where it's generally the most needed. And again, Global LNG whether it's TTF or JKM, they haven't really adjusted to similar. Are we going to see similar things there?

Well, I think it's probably more advanced going into this, I mean, there was an oversupply of crude oil coming into this disruption. There was arguably a larger overhang of LNG. A lot of new LNG production that's come on the Gulf Coast of North America, that's mitigated a lot of it. In many of the markets, you can deconvert from gas and electricity generation to coal. And we've seen a lot of that happen, particularly in China, particularly in Asia.

So I think those are the mitigating situations. Of course, what you see today is the U.S. retains its $3 domestic gas price at Henry Hub, whereas Europe and Asia are in the $18, $20 type of range.

And that brings me to the final least loved commodity. I'm looking for someone else that loves to talk about U.S. Henry Hub. Is there any hope for U.S. Henry Hub?

Think about domestic gas in North America, primarily in the Lower 48 in the U.S. It's a lot of it. Not only is there a lot of gas in this country, it's a very flat supply curve which means there's not a lot of differentiation between the lowest-cost barrel and the highest cost barrel. So there's a lot of it. And even if you produce more and the demand goes up, that supply curve doesn't change that much for long time.

The prices really get set in the different regional prices by logistics. So we can't lay pipe. And obviously, it's very difficult in the Northeast to lay a lot of pipe. Price is higher. California, it's higher. But if you're in the Midwest, I mean at Henry Hub, Waha Hub price is pretty very typical. Now how do you evacuate gas out of this country? Well, okay, you can convert it to LNG. And a lot of facilities have been built on the Gulf Coast to export LNG around the world, but it takes time.

We, with our partner, QatarEnergy, have built an export terminal. We've just started up. Our first train is online. We shipped our first cargo recently. The reason we did it, it goes back 20 years. We actually invested in an import terminal for gas long before the opening up of the unconventional business. And that gave us economics, which were highly attractive because a lot of the capital has been already spent 15, 20 years ago, and it gave us the most advantaged export facility.

The irony is that, that location was going to be a place for Qatari LNG to ultimately land in the...

That's exactly right.

Now it is the current sole source of Qatari LNG exports from Qatar and it's large...

It's 18 million tonne 3-train asset. First train is online. The second train will be mechanically complete at the end of this year and a third train will be finished in the first half of next year. So that's a big capacity. A lot of capacity to come on in LNG around the world. I've been in this job for 8 years. I've been with the company for 42 years, I've always heard about this glut of LNG supply that's coming on the market in 2 or 3 years' time. And what's happened historically is the market suit up pretty quickly, so you don't actually see it.

Sometimes for reasons you never predicted.

Exactly.

A question coming back a bit to the oil. A general question on the sector. How long does it take for oil to move from the wellhead to the final consumed product? And what are the current inventory levels along that value chain?

Well, it's a wide, wide range. Of course, it depends where you are. If you're an importer of crude oil, take Europe, take Northeast Asia, obviously, from the wellhead, it's going to take you 2 or 3 weeks to ship, never mind, producing what's in inventory and let's just say, the Middle East to get up to Japan, then there's a whole supply chain.

People think of crude oil, the source of gasoline. Well, of course, it is. And people say, well, in crude oil goes to $150, gasoline price will be $9 in California, and that will be a serious issue. It's much, much more than that. Crude oil goes into virtually everything around us. Fertilizers, it comes from crude oil and gas, food prices, they would reflect the absence or the lack, plastics, everything you see in the world is plastics. Delivery, Amazon, still a lot of trucks around the country are running on diesel.

So the crude oil price impacts so many parts of society. In terms of inventory levels down that supply chain, of course, for every single component, every market that those barrels go into, I don't know the answer to that. What I do know is that the gasoline levels of -- sorry, the inventory levels of gasoline, the inventory levels of crude oil is pretty much in the public domain. You can plot it, you can see it and you can see that we're down, pretty much down at 5-year lows.

We also have a comparable question. China data is difficult to find. What have you seen in that country and how are they dealing with an energy crisis?

While the Chinese have been building steadily a strategic petroleum reserve for years, consistently building it, our data would suggest they haven't touched it very much during this crisis. They've managed to secure crude oil. They've managed to use commercial inventories within the country. That doesn't appear that they've touched that. And so sort of position to the rest of the world, you would argue, based on that data, they're in a very strong position. They have a very large petroleum, strategic petroleum reserve, which they've obviously planned and built for a long, long time.

And then seesawing quickly back to Henry Hub. What impact would the increase in export capacity, LNG export capacity have on Henry Hub price? I think I know your answer.

Yes. Not a lot. I don't believe it will. I mean, because there's so much, there's so much gas in this country, and it's easy to go and drill a well and put more gas in the market. So even though you got this big suction sound of all its new export capacity, there's plenty in the gas in this country to supply it. And again, we go back to the supply curve because the supply curve is flat, they just mean the price is unlikely to change. I think most predictions that you see from third parties suggest that price is going to gradually rise over the next 10 years. I think it's more likely to be driven again by regional differentials, regional differences based on logistics or lack of logistics.

So if we take that macro backdrop and start to think about strategy, I always like to ask the question as a former strategist, what won't ExxonMobil do? To me, strategy is what you won't do.

Well, here's what we will not do. We're not going to deviate from the core capabilities of this corporation. We're a hydrogen carbon manipulator company. That's our business. I talked about our strength. Our strengths are understanding the subsurface. Our strengths are in executing major capital projects for lower costs than anyone else. Our strengths are in catalyst conversion.

So leveraging those capabilities, the core capabilities I talked about are core to every part of this company. This is why we resisted getting into wind and solar for so many years. We don't have any capability in that space. We know about hydrocarbons. So we will not deviate from that. We will not deviate to chase volumes. I'm absolutely adamant about that.

You can grow a business, but if you don't grow the value in a commodity business, every investment you make wants to be left inside the supply curve, the lowest in the industry. So we're not going to chase volumes, even though prices are very, very high. Now it takes a long time to bring new capacity online. We're absolutely focused on the lowest cost barrels.

So as an example, in the upstream business, we have not made an investment since 2018, 2019 above $35 cost of supply. And what does that mean? That means for the life of that asset, 30 or 40 years typical for an upstream asset, if the price was $35 Brent for the entire life of that project, we would still make a 10% return. That's what we put that ceiling on investments in the corporation. What it does is it forces our corporation to identify the most profitable barrels.

Our Permian cost of supply is $30 or less now. And so we won't chase volume. We will absolutely leverage our capabilities. So maybe just one other because it comes to my mind. I mentioned that we've taken $15 billion of structural operating costs out of the business in the last 6 years. We have plans to take another $5 billion out by the end of the decade. People said to me, "Well, that's it. You must have taken all the fat out then."

It's not correct. It's a commodity business. You have to drive costs out year after year after year. Structurally, it's not cut structurally engineered costs out. None of us know what the impact of AI is going to be. I don't anticipate it's going to raise costs. It's going to find ways to take more costs out of the business. So I think those are the 3 areas I'd say, Bob.

We're going to continue to leverage what we're good at. Our capabilities are our competitive advantages. We're not going to chase volume for volume's sake. We're going to continue to focus on the lowest cost barrels, the lowest cost performance in the industry, and that will continue.

So that segues into the upstream. 5-ish million barrels today. 5.5-ish million barrels by 2030 and you split those upstream barrels into 2 categories: advantage assets and maybe traditional. I don't know what -- I don't want to say disadvantaged non-advantaged. I don't know what you call the other.

Today, those legacy assets might be are worth of 2 million barrels a day. By 2030, there'll be less than 2 million. So all of your growth is coming from advantaged assets. And that's Permian, Guyana and LNG. So let's start with the Permian. What is the -- and I really want to talk about your conviction in that growth rate, what you need to do to get there, you have focused on R&D and technology as a way to unlock those barrels. So start with the easy stuff starting with how are you going to get there? And then let's go down the technology path.

Yes. If you look at the industry and you certainly look at ExxonMobil in the Permian, the efficiency improvements over the last 6 years have been extraordinary. I mean you can see that as an industry when you look at the number of rigs that are running in the Permian, they come down dramatically and yet the production has continued to go up. So we know exactly where we're going to drill. We have the resource in place. We have the plans in place.

It's all about execution in terms of delivering, we'll be 2.5 million barrels a day by 2030 in the Permian. We have the largest contiguous Tier 1. Tier 1 means the highest concentration of hydrocarbons, the highest quality resource in both basins. And that's really, really important.

So we have the resource. The question is how do you deliver that resource? How do you get the resource to the surface in the most profitable manner? And I've said many, many times, Bob, this is a balance between resource recovery, capital efficiency and production.

You can improve resource recovery with technology. We've talked about that a lot. You only recover, I don't know, 6% to 8% of the hydrocarbons in the unconventional space. In other words, you leave 90-plus percent in the ground. So the key is how do you get more out. And we spent 8, 10 years in research in terms of how we get more resource recovery, how do we improve that?

We're well on the way to improving that by 50%. And we committed to do that by the end of the decade. We've said that we will double the resource recovery early in the 2030s. We're on track to do that. How are we doing it? Well, we are fracking. We're smashing that rock under the ground more effectively and cheaper than anyone else. In other words, the fracking, the more you smash the rock, the more space you have to recover crude oil.

But it's not just about smashing it. This is 1 to 2 miles below the surface of the ground. So you smash the rock, you've got 2 miles of rock trying to push back down to close those gaps. That's why you inject proppant and the industry injects sand to keep those minute channels open.

The problem with sand is it's heavy. So if you put a frac and the frac goes 1,000 feet, the channel goes 1,000 feet under land, under the ground. The sand will only go part way up that frac because it's too heavy, it stops. So we're using lighter proppant. We're using lightweight coke, coke from our own refinery. It has the same strength, but is much lighter. And it allows that proppant to go much further down the frac, keeping the frac open, giving us more recovery, 20% improvement in recovery through the technology that I talked about.

So I think we have -- we've talked about 40 unique stackable technologies. And those technologies that we're pursuing and deploying in the field, the lightweight proppant I've just talked about is one of them. That's to recover more crude oil and to get an improvement in capital efficiency because you can recover a lot of crude oil, maybe you overcapitalize it, how it doesn't work.

You can reduce, you can do the opposite, reduce your resource recovery, spread out the wells, get lower capital spend, improve the capital efficiency. It's getting that balance right. The key for Exxon is the differentiated performance. We have a performance. We have a set of technologies, which is giving us lower cost drilling and fracking than anyone else. The higher recovery than anybody else.

And Bob, as you know, we've taken a unique position in the upstream industry by all these technologies we're deploying with patenting. Historically, in the upstream business, people don't patent their technology. We are patenting it, and we fully anticipate defending that proprietary technology.

That's nice. That means at least external people will see those patent filings and so we'll start to get an idea of what you're doing. We've known about the coke proppant. Longer laterals is another thing you've talked about. Care to tease us with any other technologies? Or should we wait for the filings?

Well, let's just -- let's talk about what you try and do. So in the Permian, there are multiple benches, layers of rock with different concentrations of hydrocarbons with different density of rock. And that changes, that changes by each bench. It also changes by geography. And what's important here is you get the spacing between the wells correct. Because if you have the wells too far apart, you leave too much oil in the ground. If you have them too close, you spend too much capital.

So how do you get that balance right? This is a good example of where AI is helping the industry, helping us. Because today, we have an army of engineers and geoscientists who are doing that mapping to lay out the next cube development plan, to get that balance right between capital efficiency and resource recovery. AI can do that. We're using AI to do that. We are using AI to -- you can put different frac strengths into the rock. You can frac harder, you can frac softer, you frac more, it's more expensive. You frac softer, the fracs aren't as large.

But to get that balance right is really very important. So how you frac and the intensity of the frac, that's a lot of the technologies that we're putting in. You need to get that oil and gas to move. You've got these micro pores. The diameter of these channel is only a grain of sand. And so you're trying to get this thick globby oil through all of that. You want to mobilize it. So surfactant, you heard people talk surfactants targeted at each bench and at each geography to help the oil move is a critical part of what we're talking about.

One final one. To get oil out of a reservoir, you need pressure. If you're in the Middle East and you drill a hole, there's a lot of pressure underground -- 2 miles underground, which forces the oil up. As you extract more oil, the pressure goes down in the reservoir and you can't get as much. It's under pressure to push the oil out. So in the unconventional space, secondary and tertiary recovery is going to be really, really important.

How do you repressurize the reservoir to extract more oil for the long term? It will never be economic unless you have large contiguous acreage. You just have a 2-mile block, I can assure you, it will never be economic as we have the largest contiguous acreage, we're putting a lot of technology into secondary and tertiary recovery. So there's your teasers.

I will take those. Excellent. Two more advantaged assets. It's funny. In past years, Guyana was about the most exciting thing out there. We'll move it behind the Permian. And we'll talk about it just briefly. It's almost been dull, it's repeatedly dull success, right? Despite...

I like that. I mean I like the description.

Talk to Guyana.

Well, Guyana has been extraordinary. I think everybody understands that. I mean it's not just about finding the crude oil, it's about the execution capability. I mean, we're building the lowest-cost facilities in the deepwater, the industry has ever seen at the fastest pace that industry has ever seen. We've got 4 facilities online, 4 FPSOs.

They're all running above their design capacity. We're producing them. In the first quarter, I think 900,000 barrels a day versus a capacity of 800,000 or something like that. So they're extremely well. We have 4 more in the pipeline. We'll bring 250,000 barrel a day bolt-on in the second half of this year. We will bring another one on in the second half of 2027. And our seventh and eighth boats will come online in '29 and '30. So we'll have a capacity of 1.7 million barrels a day by the end of 2030.

Stabroek is a massive block and I think not only has it been successful, there remains a lot of potential. I think a lot of people are aware that 30% of the block is under force majeure because there's a border dispute between Venezuela and Guyana. We anticipate, and I think the world anticipates that will get resolved here in the next 12 months. And we'll go on the lead of the Guyanese government, what we want to do with that.

But obviously, there is potential there. We have signed up this year to take a sole position offshore South of Trinidad. I think this is pretty telling. And I think most people can understand what we're doing here. We see this geological play going up through Guyana and potentially going into Trinidad and we've secured all of that, which offers us exploration, potential exploration you never know until you drill but its potential.

We have 8 FPSOs in the southeast of the Stabroek block. That's really, really critical for the next decade and beyond because it gives you this opportunity for really low-cost tiebacks. In other words, you got no more capital in the ground or limited capital and you can drill small pockets of oil that are relatively close and run them back to those vessels.

And the key here has been the execution. We use this principle of design one and build many. And that's what we're doing. And the execution of that from our projects organization has been exceptional.

Maybe I'll just -- if you don't mind, just extend because I mentioned AI a moment ago. And I think AI is going to be pivotal in this industry. I mean, the Holy Grail in our industry is, can you find more oil and gas? If you find it, it's the most economic. You have to buy it from somebody, you find it.

And how do you use AI to find more oil and gas? We have the largest subsurface data set globally of any institution in the world. The key for AI is do you have the data set? And what you're looking for is to analyze all of that data to see if you can find similarities to find new opportunities.

And the reason I raise it now, in Guyana, we have built an agent, a model, let's think of it that way, which if we give it the seismic data that we've run, I'm oversimplifying to make a point and we say, go find the crude oil, it can find all the crude oil that we've already found with a 90% success rate. That is pretty extraordinary.

So you can feed it to all the information and all the discoveries that we've made improved, it can identify them just by feeding that seismic data. You've got to have the data set to be able to do that, but it offers obviously potential for the future.

One more on that point, Bob. We have analyzed the well data from 50,000 wells that have been drilled in the industry all over the world, 50,000. It would have taken us 15 years to do that analysis. We've done it in a matter of weeks. And again, you're looking for similarities that humans may have missed. It's identified 150 exploration opportunities worldwide. We don't know if they're going to be successful or not until you drill a hole, you can never be sure. But the potential of applying this technology, AI, not just to Guyana, but globally is something that I think it will be really, really important for this industry in the future.

Last question on this topic, it's fascinating. If you think about where the FPSOs sit today in Stabroek block, they sit at the mouth of the Essequibo River [indiscernible]. You drilled a well in the middle of the block, Ranger, that was a carbonate discovery, right, carbonates, coral reefs loves to stay away from sand systems.

When you get to the western part.

This is a geologist talking.

Western part of the block, you're getting into the [ Orinoco], which is actually a higher discharge system than the one you found in the East, and you've taken exploration across the mouth of that. Did you do all that after AI? Or has AI helped that as you're starting to look at...

No. We've done all that analysis before the use of AI. And I think, again, I don't want to say we've -- we've reached the holy grail in AI and exploration, we certainly have not. But what I'm saying is we're making progress. And it's really important that we're making progress. And the key to progress in this is to have the data set. That's what's really, really important.

Ranger is a carbonate structure. This is one of the discoveries in Guyana. It's very, very different from all the developments so far. We've got work to do there to see if we can develop that or not.

Third advantaged asset is LNG. We talked about the Strait of Hormuz. And we have a number of questions on macro that will hopefully get back to the very tail end with LNG disruptions, you have 2 unsanctioned LNG projects, one in Mozambique, one in Papua New Guinea, some Japanese trade house talks about diversity of supply, security of supply. Talk to those projects, talk to the potential of FID this year? And then maybe talk about the overall LNG portfolio.

Yes. Mozambique, enormous resource, very low-cost resource, challenging location. It's right on the border of Tanzania. We have Block 4 and Area 4, and we're the operator of that. We plan to FID to sanction 18 million tonne development this year, and we're on track to do that this year.

Very low cost because the reservoir is very large, close to the shore. Importantly, it's on the East Coast of Africa. So in terms of distribution and shipping, it allows you access to the Asian markets at a much lower cost. Papua, of course, Papua New Guinea is already in the Southeast of Asia. And this is a -- it's a new reservoir and new development with our partner, Total, but we will be leveraging the existing liquefaction facilities that we already have there.

Again, our plan and we believe we will sanction that project this year. These are, I would argue, the most economic opportunities in LNG around the world. We are in Qatar, with Qatari, they're big NFE. We have a relatively small position there. We have 25% of 1 train. There are 4 trains. So we're 25% of 25% with 2 million tonnes. And obviously, they're getting close to completing that, and that will depend on how they can start up their activities. So that's what we have on the target.

Both those projects, Mozambique and Papua, which are both very large for ExxonMobil will not be online toward 2030. When I talk about growth beyond 2030, obviously, there are components in there. We also have the Golden Pass facility on the Gulf Coast of America. We're a 30% position again of 16 million to 18 million tonnes, which is coming online.

What I like about our LNG portfolio we've established is we have positions all around the world. We're in Australia. We're in Papua New Guinea. We're in the Middle East, we're in the Gulf Coast, we'll be in Africa. And that allows you to optimize trade flows. It allows you to trade that really allows you to optimize flows around the world. So we like our position in LNG and those are big projects to be able to execute in the next few years.

The 3 advantaged assets. Is there anything in the portfolio that can move up to the big leagues. They can move from a legacy...

You can the try 2 million tonnes of what you said was less strategic. I don't regard them as less strategic. It's just that the reason we talked about Guyana, Permian and LNG like that, those are the growth engines. Extremely low cost of supply, left-hand side of the supply curve with lots of potential.

Just to give an illustration in the 2 million tonnes you talk about, it's not growing, but there's 15% depletion in our business every year. So to keep it flat, it means you've got to be growing something. We're in Upper Zakum with our partner, ADNOC, very, very attractive asset. We are growing that with our partner there. That's a key part of our growth portfolio. We've been highly successful in mining. And we regard our coal operation as the lowest cost mining operation in Canada. If you go up there oil sands...

Oil sands mining...

I apologize, oil sands. This is -- you mine sand, it's 10% crude oil, you've got to extract the crude oil from the sand, and that's the way of -- it's a hard way to make oil is the way I look at it. But it's really interesting if you go up there. These are massive trucks and massive scoops that are taking these oil sands and take it to the processing facility, 100% autonomous.

Well, it's not a single person driving those vehicles now all controlled again by AI. So we're growing that. We're growing our in situ, which is a heavy oil business, a little different than mining in Canada. We see good growth potential there. So across the portfolio, we have other unconventional assets like the back end that we plan to continue growing. We have growth in Angola. We have growth opportunities in Nigeria. So within that 2 million tonnes, there's a lot of opportunity.

2 million barrels.

2 million barrels. Sorry.

And then that would suggest that things like inorganic opportunities growth would be unnecessary, but still part of your strategy. Talk about M&A and what role it plays in the portfolio.

I think the key to M&A is, can you acquire somebody and get 1 and 1 to equal 3. There's no point in just buying somebody for the sake of buying somebody to get volume. You've got to have a deal space. You've got to have value. We bought Pioneer, as you're well aware, and the key to that was the technology I talked about, the ability to recover more crude oil out of the rock and do it at a lower cost.

Meant that, that resource that Pioneer had was worth this much to them, it's worth a lot more to us. And that creates deal space. We can obviously add a premium to Pioneer, and it creates tremendous value for us. That's the key with M&A. Can 1 and 1 equal 3? What I like about our position is because we have this growth portfolio, we don't have to do M&A. We don't have to.

We have a growth portfolio already. And we like to describe ourselves as picky acquirers. We're not going to do it if the deal is right, but the key to the deal is to create deal space. What can we do, which adds more value to anyone that we acquire? That's the basis of Pioneer. So I would tell you, if you're in my job, you're looking at every company and every asset in the world on an ongoing basis. Of course, you are. The key is does the time -- is the time right, can we create that deal space? Is that an opportunity set?

So what I'd say, Bob, is, of course, if you're in our business, you look for those opportunities, you're constantly assessing them. You're constantly reviewing them. Timing has to be right, and we'll see that plays out. So I've told you nothing about are we going to acquire anybody...

You gave me some boundary conditions. If we think about this year, mathematically, global crude prices this year are almost going to have to average $90 barrel or more, perhaps more. We know what your dividend payment is and how it grows historically. We know your plans for share buybacks. We know your CapEx plan. You haven't changed them this year, amidst this run up in price. And therefore, we or consensus would have something like $30 billion more cash flow coming to you at this part of the cycle. A good question would be, how do you reallocate that $30 billion of pro-cyclical cash flow?

Well, first of all, let's go back to your price assumption. I don't know if the Strait of Hormuz opens tomorrow, price doesn't get up to this $150, but it is going to take time to rebalance the global markets for sure. The ships are all in the wrong locations. So it's going to take -- and you can estimate 4 to 6 weeks before we get into a normal supply chain. And it all depends on whether the Strait opens and at what time it opens.

And then the question for the world and every country and every commercial organization is how quickly do you rebuild those inventories? And if you're nervous about this thing starting up again, you're going to rush. And so that's going to have more demand than we had going into this crisis. So that could keep the prices high. But I think there's a bunch of unknowns.

I think logically, you would say there is going to be some pull on demand and there's going to be a lack of supply over a period of prices are going to be elevated which for a company like us could end up with the situation you're in. And first of all, I mean, we have optionality. We're going to build cash, of course, on the balance sheet. We're going to address debt, of course, we are. And then it will be a question for the Board around distributions.

I like the fact that we have this continuous stable share buyback scheme. We've never had that historically as a company. I like the fact that we continuously raise the dividends year-on-year. Whether we feel there is an opportunity to do more than that, Bob, I think the key for us is generate the cash, lower debt, put it on the balance sheet, let the Board of Directors decide.

And that's a process...

Yes.

So wait for an opportunity set. Two, on the opportunity side, I'll try to combine a couple of the questions as well. I had a question around Australian unconventionals and a question around Venezuela. What role will those 2 assets play in the portfolio?

We had a lot of publicity about ExxonMobil in Venezuela in recent weeks, because I always say be careful what you read in the media. We're assessing Venezuela with the support of the U.S. government. We have teams in Venezuela now. We've had teams in Venezuela. You have to assess technically what the state of the assets are. We're in discussions with the government of Venezuela, we're in discussion with PDVSA. Yes, it's going to take time.

We haven't been in Venezuela for gosh, 20 years. We've been expropriated twice. So but we're in there. It's a tremendous size resource. It will take time to understand whether that's going to compete for capital in our portfolio, whether we can get agreement with the [indiscernible] and with the government of Venezuela. It's an opportunity set -- as large as we are, Bob, you have to look at every opportunity around the world, and we're certainly doing that. I've forgotten your first question...

Australia unconventional...

Australia unconventional, yes key is unconventional. The rocks have got to be right. The fiscals are going to be right. You get the right rocks and the right fiscals. In unconventional, you need a lot of open space because the key...

Australia has open space.

A lot of open space. Drill, frac, drill, frac, drill, frac, but then you've got to get that product to the market.

So Argentina has a lot of unconventional rock. Azerbaijan, Algeria, Australia, the key is what competes. Early days in Australia, there is certainly potential there, but it's quite a ways in land. So you've got to build a lot of pipe to get it to the open market and can that be economic? Can it compete in the global market?

I would tell you, there isn't an opportunity around the world that we're not involved with, we're not addressing, we're not assessing, I would say, including Australia because if you're the size we are, it's a 15% depletion every single year, you have to be looking at everything. We're looking at Venezuela, we're looking at Australia, but really new yet.

It sounds like Algeria and Azerbaijan would be higher on your unconventional list in Australia?

Well, we've looked at them more, but again, very early days on all of them.

We've got less than 2 minutes left. Could you close out telling us what's the value proposition ultimately for owning ExxonMobil shares?

Yes. Well, I'll repeat a little bit of what I talked about at the start. The runway for this corporation is unmatched of anything that we've had in the last 40 years. We have the strongest, highest earnings and cash flow growth potential that in decades. It's taken a lot of effort to reengineer, rewire the corporation to get that space.

We laid out this plan to 2030, 18 months ago. Six months ago, we updated it. We added $5 billion cash flow growth and $5 billion earnings growth between now and the end of the decade. So at constant price, we will increase earnings by $25 billion between 2025 and 2030. And cash flow will increase by $35 billion. We added 5 million included in that 6 months ago without any increase capital expenditure, and that is due to technology.

The key in this industry is can you differentiate performance versus everyone else. And I think the data suggests and it shows to you not only do we have a growth runway to grow cash flow and earnings through 2030. We're putting those foundational and blocks in place to make sure we extend beyond that.

Perfect timing. With that, I want to thank Neil. I want to thank you in the audience. I encourage you to stay for Diamondback, followed by Chevron. And with that, let's thank Neil.

Good morning, everyone. Welcome to ExxonMobil's earnings call. Today's call is being recorded. We appreciate you joining us. I'm Jim Chapman. I'm joined by Darren Woods, Chairman and Chief Executive Officer; and Neil Hansen, Senior Vice President and Chief Financial Officer.

This quarter's presentation and prerecorded remarks are available on the Investors section of our website. They're meant to accompany this quarter's earnings release, which is posted in the same location.

During today's presentation, we'll make forward-looking remarks, including comments on our long-term plans, which are subject to risks and uncertainties. Please read our cautionary statement on Slide 2. You can find more information on the risks and uncertainties that apply to any forward-looking statements in our SEC filings on our website. We also provide supplemental information at the end of our earnings slides, which are also posted on our website.

And now I'll turn it over to Darren for opening remarks.

Good morning, and thank you for joining us. Let me begin by recognizing the impact of the conflict in the Middle East and our colleagues and partners in the region. We've been in close contact with our regional partners as well as with companies and countries we have worked with for many years. We are proud to stand beside them during these very difficult times.

While the financial impact in the region is real, it is even more real is a daily threat our colleagues and partners have been living under. We remain committed to supporting them as we work to restore operations and repair assets with a clear focus on safety, and disciplined risk management. The Middle East is and will continue to be an advantaged and meaningful component of our global portfolio. The disruption to the broader economy, we are seeing underscores the critical role our company plays in providing the affordable, reliable energy and products the world depends on. What we produce remains essential to development and progress sustaining and improving living standards around the world.

In this environment, scale, integration and execution excellence matters. Those advantages, combined with the deep experience and capability of our employees, give us the ability to respond quickly and manage effectively through disruptions. Our competitive advantages are on display in this quarter's results. We delivered strong operational performance in a challenging environment, maintain rigorous safety and reliability standards and continued advancing key priorities across the portfolio, supporting long-term value creation for our shareholders. We saw those advantages in our response to supply disruptions, leveraging our global portfolio to support customers.

We delivered on our plans to increase Permian production year-over-year, achieved record levels of production in Guyana, achieved first LNG at Golden Pass, optimized logistics and crude product flows and safely maximize refinery throughput where possible. In fact, in March, refinery throughput increased by approximately 200,000 barrels a day versus February or the equivalent of a midsized refinery. As we brought back refineries from turnaround and deferred maintenance activities where we could without impacting safety or long-term reliability.

Our global supply chain organization rapidly executed alternate routings from the U.S. Gulf Coast to Asia to sustain critical supplies for our customers. Despite the unprecedented impacts in the global energy system, we maintain deliveries to our customers globally through coordinated planning and real-time vessel visibility.

Financially, excluding identified items and estimated timing effects, our first quarter earnings per share were up versus the fourth quarter of 2025, reflecting the strength and resiliency of the underlying business. Stronger portfolio mix, structural cost reductions and execution excellence continue to drive improving performance. Those same factors leave us better positioned to manage uncertainty versus several years ago.

The strength of that advantaged portfolio is clear in the work we're doing today. We are expanding our LNG footprint, our newest facility, Golden Pass LNG, a joint venture with Qatar Energy is increasing U.S. export capacity and an important moment for global supply. Train 1 of the facility achieved first LNG in March and will deliver an increase of about 5% relative to 2025 U.S. exports. By the time the third train is online, we will increase the country's current LNG exports by roughly 15%. At the same time, we continue to progress towards final investment decisions on LNG projects in Papua New Guinea and Mozambique, both expected later this year.

Elsewhere in the upstream, Guyana continues to set the standard for execution, development pace and value creation. We delivered record production, continued strong reliability and have [indiscernible], Whiptel and Hammerhead projects under construction with [indiscernible] expected first oil late this year. Consistent with our broader approach to support long-term economic development in countries where we operate, we've committed $100 million investment over 10 years to support national STEM education in Guyana, strengthening our bond with the people of Guyana and establishing a foundation for long-term prosperity.

In the Permian, we continue to show how scale and proprietary technologies improve efficiency, recovery and long-term value creation. We remain on track to grow full year Permian production to 1.8 million oil equivalent barrels in 2026, with that growth grounded in value, not volume. We're also progressing our Permian Net Zero ambition with continuous methane monitoring implemented across all key assets in New Mexico.

In Product Solutions, performance remained strong, driven by higher value products and technology-led differentiation. The Beaumont refinery expansion completed in 2023, fully recovered its initial investment ahead of expectation and is contributing to stronger margins and cash flow. This underscores how disciplined investments grounded in long-term market fundamentals, rigorously executed, generate durable returns independent of price cycles.

In parallel, we continue to progress our journey to build a reliable domestic supply of advanced synthetic graphite. We recently held a ribbon-cutting ceremony at the pilot production plant in Kentucky, which represents a critical milestone between lab scale development and full commercial deployment. In Low Carbon Solutions, we began transporting and storing captured CO2 from the new generation gas gathering project, our second startup in less than a year. Through this year and next, we plan to start facilities with the capacity to capture an additional 4 million tons per year of CO2.

Importantly, with our advantages, these projects deliver attractive returns that compete with the investments in our base business. Technology as a core competitive advantage remains central to our strategy is one of the ways we improve structural competitiveness, strengthen returns and create new earnings opportunity.

In Guyana, we achieved the first deepwater fully autonomous well section using rig automation and automated downhole steering tools, improving both safety and efficiency. Additionally, we're on track to leverage our proximate technology in subsea applications with Hammerhead and future FPSOs, further demonstrating the materials performance and demanding offshore environments.

Across the company, we're making further progress to simplify how we run the business through effective application of technology. Our enterprise-wide process and data platform transformation, the largest ever undertaken in the industry reached an important milestone with the successful launch of a new modern workforce enablement system. This significantly simplifies the work processes that underpin our talent management approach and streamlines our payroll processes in more than 50 countries. It provides a single, consistent data foundation on which future system deployments will be built. We delivered this with no business disruption demonstrating the strength of our centralized core capabilities, fully leveraging our scale advantage. This is the first step of many to make our processes more efficient and effective, ultimately enhancing the experience of our global workforce. This will allow our people to focus their efforts on high-value work, further reinforcing our competitive advantages.

Without the changes we made over the last decade and the focus we've put on leveraging our core advantages, this game-changing enterprise system would not be possible. This is establishing a truly differentiating foundation for long-term competitive advantage. With recent events, the world has been reminded of the critical role and long-term need for reliable, affordable energy products.

Today, more people recognize that demand for oil and natural gas remains substantial and will continue to play an important role in global economic growth far into the future. This fundamental and the competitive advantages we bring underpin our strategy, our capital allocation decisions and the long-term success of our company. We are confident in our advantages, the importance of scale and integration, the critical role of technology and execution excellence and the power of talented people. We are confident in our continuing transformation and the critical role our company will play in any future scenario. And we're confident in our plan to build long-term sustainable earnings and cash flow growth, the basis for long-term growth and shareholder value. Thank you.

Thank you, Darren. Before we move to Q&A, I want to highlight that we plan to publish our 2026 Advancing Climate Solutions report this month, detailing all of our progress on solving the And equation, meeting demand and reducing emissions as well as our latest sustainability report. All these documents can be found on the Investors section of our website. We really encourage you to take a look. And with that, let's move to Q&A. Please note that we ask each analyst to limit themselves to 1 question as a courtesy to others. And operator, we'll ask you to please open the line for our first question.

[Operator Instructions] The first question comes from Devin McDermott of Morgan Stanley.

So Darren, I wanted to try to unpack some of your views on the near and longer-term impacts from the situation in the Middle East. And on the near-term side, I was hoping you could talk through your view on the time line for operations in the region, including your own to return to normal once the straight reopens? And then shifting to the medium and longer term, I would just love to hear your perspective on how lasting you expect the market impacts to be across upstream, refining and chemicals and whether you're seeing anything that structurally changes your view of normalized or mid-cycle price at the margins?

Sure. Thank you, Devin, and thanks for the question. Maybe to start, let me just provide some context around how we're looking at what's been playing out here in the market, which will form the foundation for then how we see it continuing to play out. So I think it's obvious to most that if you look at the unprecedented disruption in the world supply of oil and natural gas, the market hasn't seen the full impact of that yet. And you only have to look at the ranges that oil prices have moved at, which are very consistent with the last 10 years in the history there versus this unprecedented and historically unprecedented disruption. So there's more to come if the Strait remains closed.

Why haven't we seen those impacts manifest themselves pulling in the market yet? Well, I think we all know there was a lot of -- a lot of oil in transit on the water, a lot of inventory on the water that has been deployed in the first month of the conflict, strategic petroleum reserves have been released. Commercial inventories have been drawn down. And so we've seen that play itself off and mitigate the impact as we move through March and then here through April. As you get to the kind of the men working levels of inventory on the commercial side, you're going to lose one of these sources of supply.

And so, we anticipate as that happens in the Strait remains closed, that we will continue to see increased prices in the marketplace. Once the Strait opens back up again, it will take some time for frankly, to get back to a stable flow rate that was consistent with what we've historically seen, ships got to reposition themselves. We've got to work through the backlog. Then there's obviously the transit time to get product to market. And so we're thinking there's going to be a 1- to 2-month time lag between the Strait opening up and the market seeing normal flow.

And then depending on how long this goes and how far strategic petroleum reserves are drawn, how low commercial inventories go, there will be a period of time where players, markets, governments, countries try to refill and replenish those inventories. And so that's going to bring an additional level of demand into the marketplace, which we think is going to put upward pressure on prices. I would also anticipate that many countries around the world will look at -- if they don't have strategic petroleum reserves, start thinking about whether they need those, that may bring some additional demand into the marketplace. And then obviously, people are going to reassess their energy security and how they ensure that going forward that they don't have the same exposure that many of them have been -- have realized here in the short term.

So I think all those things, difficult to predict exactly how it plays itself out. But I do think that will have an impact on prices with basically manifesting itself as maybe higher demand than we anticipated at the beginning of this year.

And then the final point I would make with respect to longer-term implications. It kind of depends on where Iran ends up. And if the world -- how comfortable the world is, what assurances they have that the flows will remain uninterrupted. And so whether or not a risk premium gets put into the market, I think, is a question that has yet to be answered.

With respect to our own facilities there, and we were obviously, first and foremost, as this conflict erupted, very focused on protecting our people and making sure that we kept them safe, which I'm very pleased with how our organization responded to that. As the conflict has gone on, and we've done our risk assessments, we have allowed more folks to return to help with our partners and assess the damage. I think once the Strait opens back up again, a large part of the capacity that isn't in the market today will come back on in a relatively short period of time. We'll have to cool down the LNG trains to get that movement again. That will take a few weeks. But I think we'll see that demand or that supply ramp up fairly quickly.

And then ultimately, we'll have to work with Qatar Energy on the 2 trains that were damaged. That will be obviously a much longer time horizon with respect to repair. That will be about 3% of our global production and Qatar Energy came out early on and said, the repair time will be anywhere between 3 and 5 years. Obviously, we're working to be on the low end of that range. But we've got more work to do to fully assess the damage and understand what options we have for repair. Neil, anything to add to that?

Devin, maybe another just perspective on the near term. And obviously, we've been focused on the external impacts to our upstream production. Certainly, what we've seen in the Middle East, but we also had some other external impacts in the quarter, some impacts in Kazakhstan from drone attacks. And it seems like it's been a while, but there is also a fairly significant impact from the winter storm in the Permian back in January. But if you exclude all those external impacts, it really highlights the benefit and the value of having a global diverse portfolio. If we take those impacts out, year-over-year, our upstream production was up 8%. And that 8%, again, comes from advantaged assets in the Permian and in Guyana, organic advantaged assets.

So again, it just highlights -- yes, there is a lot of disruption, but having those advantaged assets that global diverse portfolio allows us to continue to deliver long-term shareholder value.

The next question is from Bob Brackett of Bernstein Research.

I'm drawn to your Exhibit 5 where you show March 2026 refining margins. Obviously, it's not a full quarter. It's a single month. Can you talk to that opportunity maybe inform us how April turned out and then talk about how you can sort of help balance that market? And what are the opportunities for you in the downstream this year?

Yes. Thank you, Bob. I would just start by saying one of the advantages we find here in this market and with the pressure on supply and the resulting then increase in refining margins is we're very satisfied that we've never lost focus on making sure that we were building a very robust and advantaged refining network. You'll recall, we started up a very large expansion at our Beaumont refinery in 2023. I think when we first announced that investment in refining, there was a lot of, I guess, questions about whether or not that was going to play itself out and be a profitable investment. We've now paid that investment off completely.

And so I think that is just an example of how we never doubted that having an advantaged footprint in refinery, one that has a diversified product slate is going to be critical as we move forward to meet the world demand. And so we feel really good about where we're at. We've had several investments in high grading the production of the refining. And so today, we've got a very strong circuit to meet this challenge in the marketplace today. If you look at our Gulf Coast refineries, which is the largest footprint we have, it ran out in the first quarter at record utilization rates.

And so, we've been very focused on reliability and making sure that the facilities that we have are running at peak production. And we emphasize that really as we moved into March and saw this disruption coming. We worked through the refining circuit for units that were in turnarounds and down the organization expedited that maintenance work to get it back online sooner for units that we were planning to take down for additional maintenance. We did the assessments to see if we could safely defer those. And so really worked hard to try to respond to the demand that was out there. And from February to March, we increased refining production by 200,000 barrels a day.

And so just an example of how we were leaning on the organization to try to meet the moment. On top of that, our supply organization has done a tremendous job at moving barrels all around the world to rebalance the supply that we have with the demand shortage that we see developing across the world. So all that continues. And I think that's going to play out very well for us as we move through April and into the second quarter.

I'm extremely pleased that the work that we've historically done over the last 10 years to reshape the organization. This was a real test of that, the changes that we've made. And frankly, it has proven itself to be extremely impactful with respect to our ability to bring the most critical resources, our best talent on some of the hardest problems. And thankfully, we had built our trading organization up to help facilitate these movements. And so all that in combination, I think, has led to what was a very successful month of March, not just from an earnings standpoint, but obviously from the ability to meet the moment and meet the demand, and that's going to play itself out going forward.

Yes. And Bob, just to give some context, I know we had some temporary transient impacts in our financial results this quarter with the timing impacts that we disclosed in the identified event. But if you take those things aside and you look at that Energy Products segment, we made $2.8 billion in the quarter, up $2 billion compared to last year and a few hundred million compared to the fourth quarter. So again, for all the reasons that Darren talked about, leveraging those world-class assets that we brought online last year, leveraging our trading capability, we've been able to deliver to the bottom line, the market environment that we saw in March.

The next question is from Arun Jayaram of JPMorgan.

I wanted to see if you could elaborate on how you view some of the resource expansion opportunities in Guyana as well as your initial assessment of the situation in Venezuela?

Yes, sure. Thanks for the question. I'll start maybe with the latter. If you look at Venezuela, obviously, Venezuela is a huge resource that's now opened up more freely to the world. There are continuing work going on with the industry, with the Trump administration with the government of Venezuela to get a context of that opportunity shape so that it represents attractive investment opportunities for the industry and generate the necessary returns to make the investments in Venezuela.

The oil in Venezuela is very heavy and therefore, requires a lot of effort to get the production up and get it onto the market. Doing that in a way that is low cost is going to be absolutely critical for Venezuela oil to be a fully contribute to the world balances and to meet the demand that's out there. And I would tell you the work that we've been doing really anchored in our resource up in Canada in that resource base there and the work on heavy oil, the technology developments we've been making, I think, positions us uniquely in terms of low-cost production of the Venezuela resources, when that opportunity -- when the context is right and the investment and the returns look promising.

And so I feel positive about what's happening, the opportunity there, more work to do, but I think we'll be uniquely positioned and play an important role in bringing those barrels to market.

More broadly, as you look at the resource opportunity, Guyana continues, we continue to demonstrate outstanding progress with Guyana, we're again at record production and well in excess of the investment basis that we had as we brought those projects online. I would just say that it's a testament to, I'd say, the innovation and ingenuity of the team working that resource and their motivation to continue to find ways to improve and get better. And I think that mentality applies itself broadly across the opportunity set. So the team is very engaged in working with developing the resources across the [indiscernible] focused on developing projects that generate the returns to -- across the entire resource base. And I think we're going to continue to see projects come online and opportunities present themselves as we continue to develop that resource.

There's still a lot of acreage that left to be assessed. And so I think the opportunity there is significant. And then I think as we look in the area as a whole beyond Venezuela, you've got the work that we're doing with Trinidad and Tobago, and I think we're going to see some opportunities there as well with time.

The next question is from Neil Mehta of Goldman Sachs.

I just love your perspective on the Permian. You guys have been very clear about this being a growth engine guiding to 1.8 million barrels a day and eventually getting to 2.5 million barrels a day. And so just your perspective in light of the higher commodity price and the need for U.S. barrels, do you expect the Permian to have an activity response from an industry perspective? Does this change the way that you're prosecuting the basin in any way? And then I know you've had a lot of conversations with the administration. We're getting a lot of questions about the crude export ban and any risks around that. Do you guys feel comfortable around that policy?

Yes. Thank you, Neil. I think first, just with respect to what we've been doing in the Permian, I think you all know we've had the pedal to the metal here from the very beginning, we recognize the importance of that resource in meeting world demand and in particular, in establishing the U.S. as the preeminent player and supplier in this market. And so we've been very focused on that from the very beginning. You can see that in the growth rate that we have achieved -- in that resource. And obviously, very focused on doing it in a very capital-efficient way and ensuring that we have a very low cost of supply.

And the work that we've been doing on the technology portfolio is showing a lot of promise. It's hard to see in the data today because we're early stages of deployment. But I would say we remain very, very optimistic that we're going to continue to see capital efficiency opportunities manifest themselves and recovery opportunities manifest themselves through the deployment of technology. And so, we're going to continue on the pace that we've been at. I would say we are running pretty full speed, unlike many of our competitors who, I think, have predicted the plateauing of the resource and the opportunities out there. We have never seen that, don't see it today. Whether the views of that change in the industry, I can't really comment on whether they can make a decision to maybe run through their inventory more quickly. I can't comment on that. I don't know how they'll be thinking about it. But ultimately, the record here or the opportunity here is to do things in a more effective way to maximize the recovery of the barrels. And obviously, that's what we're very focused on.

With respect to crude export bands, I think you bring up a really good point. I've been very encouraged by the comments made by Secretary Wright and the recognition that something like that would be hugely detrimental to the industry and the supply. And I think it's important for politicians to understand that countries and companies export product when they don't have that demand domestically. I mean the most -- your most profitable barrels are the barrels that you supply to your local market because the transportation cost is the lowest. And so I would tell you, I think everyone that's out there looks to that tier first. And it's only when you satisfy the demand of your local markets that you start sending your product and barrels farther afield and incurring the transportation cost.

So once you -- so that's what's driving the exports. The world is in price parity. And so the markets and the prices around the world all reflect a consistent price basis. So it really comes down to what are your local opportunities versus, and when you run through those, you export. If you shut in exports, you shut in production. And it's particularly impactful in the U.S. that if you shut that production in, you shut in the associated gas that comes with it. And a huge benefit to the U.S. economy to date has been low-cost, low-price natural gas, which feeds our industrial complex, our manufacturing complex. It leads to the economic growth that we've been enjoying in the company, leads to job creation expansions. And so a lot of negative implications if we see that happen.

And I'm extremely pleased that the administration recognizes that and isn't looking to that as a lever table. Unlike other countries as you move around the world that have started talking and looking at things like that. They are going to cause a bigger problem for themselves in pursuing what feels like populist action in the short term that has very negative long-term consequences.

The next question is from Betty Jiang of Barclays.

I want to ask about LNG and maybe starting with whether today's disruptions have changed your long-term view on LNG macro. And given the tightening supply today, is there any flexibility to lean in on the Golden Pass with the first train that's currently on, whether there's ability to increase that utilization and maybe accelerate the timing of future trains? And maybe just an update on the timing on the next 2 LNG projects as well?

Sure. Good. Thank you for the question, Betty, and good morning. I think if we reflect on the discussions I've had with all of you over the last year or so, there's been this prediction out there that the LNG market is going long. And of course, a lot of our LNG is tied to crude contracts. And so the supply-demand balances and the impact on pricing in the LNG market is a little different than what we have in the crude markets. But we -- so we are always constructive on LNG going forward.

And what we see now is with the off-line, the impacts with what's come offline and some of the damaged facilities that length that people were, I think talking about over the last year has gone away, and I think we're going to see a tighter market here, certainly, in the short to medium term. That's helpful in the short term. But as you know, we don't make investment decisions based on calling specific supply-demand balance and price environment, we tend to instead to focus on making sure that the capacity we bring on is advantaged, it's low cost and will be successful irrespective of the price environment.

So Golden Pass is obviously one of those assets. Mozambique, Papua New Guinea, all those are projects that we're developing with a long-term view. And frankly, have been progressing those as on an expeditious manner as quickly as we can, consistent with capital discipline and efficient project development. So we will look for opportunities in the short term, and we'll look for opportunities with our production to see if there's more that we can bring on. But I don't see needle-moving opportunities simply because in the base case, we were pushing hard to do it in an efficient and as an expeditious manner as possible.

With respect to Golden Pass, as you know, we've got Train 1 on and getting product to market. Train 2, we expect to be mechanically complete by the end of this year, and then Train 3 should be mechanically complete as we head into the second quarter or the second quarter of next year.

The next question is from Doug Leggate of Wolfe Research.

Darren, I wonder if I could come back and maybe it's for Neil, I come back to Qatar. So you've quantified the volumetric impact, the LNG impact. But my question is, your participation in the repairs comes up against, I believe, limited remaining contract length in the 2 Trains you're involved in. How does force majeure impact that decision? Do you get -- does the contract get extended? Or maybe you could walk us through the implications of that?

Yes. Thanks, Doug. I would just say -- start by saying that the long history that we have in Qatar and the partnership that we have with Qatar Energy is extremely strong and as strong as it's ever been. And so we are extremely committed to working with Qatar Energy and helping restore the supply to the marketplace. Having said that, what I would tell you is we'll do that in a construct that ensures that we generate a return on the capital and the money that we put back into that business. And so I'm not going to get into the specifics of how that will play out. But I would just say, I think Qatar Energy has always recognized that successful partnerships require win-win solutions and opportunities.

And I think that's actually been a real strength of Qatar Energy and the work that they've done in the industry. Certainly, it underpins the work that we do with them and the partnership we have as they understand and respect the value and the contribution that we can bring in our partnership, and they recognize the importance of being rewarded for those contributions. And I know the discussions I'll have with Saad and the rest of the leadership of Qatar Energy is that, that will continue to be respected, and we'll find a way to do that in a way that's good for Qatar Energy, good for ExxonMobil, and frankly, good for the world in terms of bringing that low-cost supply back into the marketplace.

The next question is from Biraj Borkhataria of RBC Capital.

As a follow-up on your LNG portfolio, you talked at the start of the call about countries thinking about their level of exposure to the region and when I look at the rest of your business, it's fairly diversified. But I look at your LNG portfolio relative to peers, and it's obviously much more concentrated with Qatar being such a big part of that. So, do recent events make you think about wanting to diversify much more rapidly? I know you're doing a few things outside of that now. But how are you thinking about over the longer term?

Yes. Thank you, Biraj. I would just tell you that we've always believed, and I think you all will recognize that we have consistently viewed LNG as a business that is going to be critical for meeting the long-term energy demands of the world far into the future. And so we've always been bullish on natural gas and LNG markets. And what really has dictated what we pursue in the investments that we're going after is the quality of the opportunities and the returns that we can generate. It hasn't been constrained by anything other than that.

And so this disruption doesn't change the opportunity set that we've been working on or the emphasis that we've had in that particular area. And so if you look at the things that are in the pipeline and that we're pursuing, Mozambique and Papua New Guinea continuing to bring on the rest of Golden Pass. Those are all growing our LNG portfolio, which has been a strategic objective that we had. And it's also diversified with respect to sources of supply, which we think was important with respect to establishing a global network of supply points. And so that is playing itself out as we speak today.

If additional opportunities develop here in the short term that we feel like we can bring advantage to and generate an advantaged project with advantaged returns with low cost of supply competitively positioned in the world supply portfolio, we'll pursue those. But my going-in assumption is that those opportunities are already out there, and we've been actively pursuing those. I don't think it's going to change with respect to what we've seen certainly in the short term, and we'll see what happens longer term. But our emphasis remains constant here.

The next question is from Jason Gabelman of TD Cowen.

Yes. I just wanted -- I just wanted to first clarify one point going back to Doug's question. If you're self-insured in Qatar like you are on most of your assets or if you have insurance on that. And then I was hoping you could talk about the opportunity that is potentially available in the UAE if they were to ramp up production towards that 5 million barrels per day once the Strait of Hormuz reopens, you obviously have a very large footprint in that country and wondering if there's spare capacity on your assets?

Sure. Thanks for the question. I won't get into the specifics of our insurance. What I would say is you're right that we have a position where we use a large portion of self-insurance. We also look at third-party assurance where we think it makes economic sense. And so we take a portfolio approach there. We feel pretty good about the coverage across that portfolio. And frankly, don't see any material impacts with respect to [indiscernible] what we -- the insurance portfolio and the damage that we've seen there.

With respect to UAE, I mean UAE is a strategic partner for us as well. We have a very long relationship there. I think we have worked very productively with ADNOC and establishing an opportunity set to take some of our capability sets and advantages and bringing to bear in terms of unlocking additional capacity in the UAE, and we are working towards that ambition. And so I think we've got a very good relationship with them. We've got very good commercial arrangements with them, and we're actively working to help the UAE grow -- meet its ambition of growing production and will be a part of that, I'm sure of it. We already are and obviously looking for opportunities to do more.

The next question is from Manav Gupta of UBS.

You guys are an expert in developing heavy oil. And obviously, you talked about Venezuela, one area where you kind of [ stop growing ] is Canada. And given everything that's going on in the world and the short supplies, is there a way you and your partner can move that proprietary technology at a faster pace and bring back Aspen or future phases of Canada. When you delayed those projects, there was an egress issue and other issues, those issues are resolved. So I'm wondering if you can restart growth in Canada also?

Yes. Thank you, Manav. I think you touched on a really important part of the portfolio and the advantages that we have in heavy oil. I would say the emphasis that we've had over the last several years working with IOL is to really drive performance improvement in our Kearl assets and making sure that as you look at the global supply curve and the cost of supply in the portfolio around the world that meets that supply that, our Kearl resource is attractively positioned in that supply curve. And the team through IOL and the work in that venture, I think, have driven improvement to the point where we see that as being a very competitive source of supply in the world market. And that's a function of, I'd say, a lot of things we've been working on.

Technology is certainly a huge piece of that, but also the practices that we bring through our operations organization and the work that we've done to bring things that we've learned through our manufacturing assets into that upstream dominated environment. I think we've seen huge benefits, a lot lower cost. And so today, it is a very productive resource, and we continue to make investments, and we see that being a long-term profitable part of our portfolio.

Likewise, the in-situ Cold Lake, we've got technical opportunities there, and we're frankly progressing those. And so that was also recognized with the technology work that we've done that we've lowered that cost of supply to the point that we do think it represents a very attractive opportunity in a low-cost supply. And so we're continuing to progress that. And that's really what anchored my comments with respect to Venezuela. I think we are uniquely positioned in terms of the global footprint that we have and the ability to go into Venezuela with the right set of circumstances to apply that technology and produce those barrels at a much lower cost of supply than many of our competitors would be capable of doing. And so we look forward to exploring that opportunity and seeing if we can flesh that out to a point where it develops a -- becomes a win-win-win opportunity, a win for ExxonMobil with respect to the returns for the capital, the assurances that we'd have with those returns, a win for the government of Venezuela and then a win for the Venezuelan people with the economic activity that would obviously come with that.

The next question is from Alastair Syme of Citi.

I wonder if I can come back to that Slide 5, and you obviously chemical margins squeezed in March, but I wonder if there's been any recovery in April back to those 10-year averages. And how you see sort of your own feedstock available [indiscernible] I think you referenced potential for the Product Solutions business to have 3% lower utilization this quarter, but I am just wondering how specifically that shakes out for the chemical products piece?

Yes, sure. Thank you. The first point I would make on that Slide 5 is we're representing industry margins there to kind of help you understand what the macro environment is with respect to the quarter and the circumstances that we are operating in. It doesn't reflect our footprint specifically. And so I would say that we are advantaged versus where the general market is primarily because of all the work that we've been doing to grow performance products and to improve the efficiency, lower the cost of our manufacturing facilities. But on top of that, we have a very large base here in the U.S. And as crude prices have risen, and we -- our U.S. footprint is primarily gas crackers, what you see is the world price being said on liquid crackers and we have a big feed advantage there.

And so my expectation, if -- as -- well if world crude prices remain elevated, is that chemical margins for a large part of our footprint will be advantaged simply because we have a feed advantage coming out of the U.

And I would just highlight, Darren, that, that North American advantage extends to our refining footprint as well. Again, this is a view of a global footprint, but more and more heavily weighted to North America. And again, we benefit from those -- from that low-cost energy supply that we have here in North America as well.

The next question is from Jean Ann Salisbury of Bank of America.

For the damaged trains in Qatar, can you give any more color about what drives the 3 versus 5-year timing to get those back online? I've read it that there's a 2- to 3-year lead time for new cold boxes. Is that right that, that's the primary factor? And are there options to speed that up?

Yes. Thank you, Jean Ann. I think the range obviously is a function of where we're at in the process of assessing, working with Qatar Energy and assessing the damage and then working out a plan to address the damage recognizing the conflict is ongoing, and we've -- and we've been very aligned, and I'd say Qatar Energy has been a real leader in this space of making sure that we are very judicious in the steps that we're taking and the deployment of people to make sure that we maintain level of protection and maintain the safety of our people working there.

And so part of the challenge is in the early numbers has just been a lot of the unknown variables that we're working through with Qatar Energy around what exactly are our options and what can we do there. And so I would tell you, it's a function of where we're at and the maturity of the work that we've done to date in terms of assessing what we can do.

I -- and I think in the point that you made around cold box, the cold box being a critical path in the work there, that is, I think, accurate to think of it in those terms. But I would just say we don't have -- I haven't accepted kind of any schedule where we're at because frankly, we haven't been able to do all the work that we need to do to kind of challenge ourselves to see what's possible here. What I would say is I have a lot of confidence the partnership and the work that we do with Qatar Energy that the capability we bring to this repair is -- will be unmatched. I don't -- whatever we end up doing here and whatever time line we said, I don't think there would be anybody else who could beat it.

So I feel very confident in the capability set that we're bringing to bear here, and we've got to work through the details to see what the ultimate answer is, but whatever it is, I think it will be the best that could be done by anybody in the industry.

The next question is from Sam Margolin of Wells Fargo.

This question might be for Neil. It's related to the timing effects. And I know it's sort of a short-term issue, but your long-term targets have been very consistent. So maybe that's where the focus is right now. They encompass a lot of different aspects of the business. And when they reverse, it also involves a lot of different moving parts. And so the question is insofar as some of the reversal of the timing effect is related to execution wins within the business, and there's prospects for volatility events to continue throughout this period of uncertainty. Were there any learnings or any changes in kind of your operating practices that were made as an adjustment to this event, and that would help you sort of reverse the timing effects faster? Or is it -- do you expect it to just kind of pass as they have done in the past?

Let me -- I'll start with that and then hand it over to Neil. I just want to make sure that kind of -- the basis of the timing or the underlying activity of the timing is understood because, I mean what this basically is, you'll all remember that we've set up this trading organization and have been growing it over the years with the primary objective to take advantage of our large footprint. The fact that we're an integrated business and involved in many parts of the value chain and to make sure that we see trading as a channel to optimize that footprint and that we think is a real advantage versus anybody else that's out there trading, and we've done that in a very methodical way in a way that we feel like manages the exposure and the risk.

And I'm extremely proud of what that group has accomplished. And obviously, very happy that we had established that capability and it was in place in March when all this broke out. But I would also tell you, just going back before that, that organization continues to optimize the footprint and bring value to the underlying businesses that it's supporting our production and our facilities.

The timing impact here is primarily driven by the fact that the trading organization is taking advantage of the opportunities in the marketplace and locking in profit. And so we're hedging the flat price risk. And so this volatility that you referred to, Sam, that's why we put the hedges in is to protect ourselves against those price movements and to really take advantage of the spread that we see -- that underlies the transaction that we put in place in locking that in. And that's why we're so confident that this is just timing and that will work itself out because this is all driven by the requirements to book the paper without booking the corresponding physical barrels that are moving. And so there's a disconnect between what we book, we book 1/2 of the deal, not the other half. When that the physicals get delivered and you actually bring those into your earnings, it will offset the paper and therefore, you'll get to realize margin.

So that's how we think about it. And I would tell you that's exactly how we want to do it. We want to mitigate the price exposure for these opportunities and lock in this value. And so that's what's driving it. And I would tell you that hasn't -- that's not changing. In fact, we've really encouraged the organization to keep on keeping on in that space.

The identified item that we mentioned is different. That is you buy crude delivered in March and January. And so we've long had a practice of trying to match up the pricing of the crude when we take delivery of the crude to run it. And in this particular case, and the reason we had as an identified item is that with the disruption, the paper that we put in place for the physicals that we bought, the physicals weren't delivered and so we ended up with a naked hedge, and that was basically a unique circumstance given the disruptions here, and that's what the identified item is. Neil, anything to add to that?

Yes, absolutely. Maybe to build on that a little bit, Darren. Again, this mismatch that occurs is the difference between the accounting standards that require us to value the financial derivatives based on the price that we see at the end of the period. As Darren mentioned, the physical transaction, the value of that remains on the balance sheet until the transaction is complete. So it creates this mismatch in earnings that unwinds over subsequent periods.

So if you think about for us, generally, we're long physical and short paper. And so what you see is in periods of rising prices, like we saw in the first quarter, these timing effects typically are negative. And then in times when we see decreasing prices, we see the opposite of that. And the timing effects become positive. But I think importantly, as Darren mentioned, when you take aside these timing effects, the trading activity that we do, the optimization has consistently delivered positive earnings for the corporation. And it's obviously something that we track and in fact, in the first quarter, when you look at the transactions that closed out where the paper and the physical closed out, we had a strong quarter from those optimization activities.

So this is truly timing, again, driven by the accounting standards and now we have to value these transactions. But the most important thing is that underlying activity of optimizing our global portfolio is consistently delivering value for the company.

Yes, I might just add on that. That's one of the reasons why you saw a slight difference in our press release and what we revealed is to help understand what the underlying activity and the value generated in the quarter was beyond what was booked with respect to GAAP, and that was the reason for that additional disclosure.

We have time for one more question. Our final question will be from Nitin Kumar from Mizuho.

Darren, you spent a lot of time on the hydrocarbon side of your business and global disruptions. Could you give us a little bit of an update on the power opportunities in the Gulf Coast. There's been a lot of debate around the pace of development and capital spending by the data centers. So just wanted to get an update on where things lie with that?

Sure. Thanks for the question. I would tell you, so I want to make sure that kind of our objective in this space is clear. And I've said this when we first started talking about the data centers and this the recognition of the growing demand here is we're not interested in the utility business of providing power. We're interested because we don't think, ultimately, that we bring a unique set of capabilities there that would manifest itself in above-average industry returns.

What we're interested in is bringing the unique capability and capacity to generate power with virtually carbon-free or emissions-free by using decarbonized natural gas that we're producing and the unconventional business and our carbon capture and storage business and leveraging the unique and frankly, only globally end-to-end supply chain or value chain for capturing, transporting, sequestering CO2. And so that, for us, is the play here. And as you know, we've been growing our carbon capture and storage business with third parties, establishing contracts to capture the CO2 and to transport and store it. And the power side of the data centers is an opportunity to do that.

So to the extent these hyperscalers and the data centers want to have very low emissions power, we have the option to provide that. And so we're in discussion with a number of hyperscalers. We're working through the specifics of the opportunity and the fiscals. And I would say that those are continuing dialogues. And frankly, it's a function of what the demand there is.

And I think what we've seen in this whole low-carbon space above and beyond carbon capture and storage, which is manifesting itself in real deals that it's challenged when people are forced to put -- pay for the emissions reductions when, in many cases, the market is not recognizing or rewarding in. So that has been the challenge in the space. And we'll see in this particular area, whether we overcome that challenge with customers and their desire to have low carbon power.

All right. Thanks, everyone, for joining this call, and thanks for your questions. We're going to post a transcript of this call to the Investors section of our website by early next week, and we look forward to connecting again later this month during our Annual Shareholder Meeting, which is on May 27. And that concludes today's call. Have a good weekend.

Okay. We are going to go ahead and kick off our first lunch keynote section here today. For those of you that don't know me, my name is Devin McDermott, and I head our North American Energy Research team here at Morgan Stanley, and I am very happy to be joined by Jack Williams, Senior Vice President at ExxonMobil and one of the members of the management committee at the corporation as well. We are going to kick off with a few prepared remarks from Jack and then dive right into Q&A from there. So without any further pause, Jack, I'll turn it over to you.

Great. Thank you. Thank you, Devin. Appreciate it. A cautionary statement. I'll be making some forward-looking statements. Our strategy at ExxonMobil kind of starts out with this, the and equation that we've -- you've probably heard us talk about before, which is as the world's population grows and people are going into rising into the middle class, improving standards of life, there's more of a need for energy and essential products, and we feel like we need to be increasing our production to meet those needs. And at the same time, we need to be reducing emissions. So that's kind of core to our strategy as a corporation.

And a key way we execute that strategy is through leveraging these competitive advantages that we have, that we built up over decades. I'm talking about their scale, the integration of our businesses, technology and then some deep functional capabilities around like project management, operations management, personnel and process safety, emissions reduction, those kind of key competencies, key capabilities that we have as a corporation and all underpinned by our people and the significant time and effort we put into developing our workforce. And these capabilities have kind of -- the way -- what we've been working on the last 6, 7, 8 years is making sure that our organization is structured to where we can really leverage these capabilities.

We made some great strides in being able to do that. And these competitive advantages, these capabilities have kind of unleashed lots of opportunities. So we have this unmatched pipeline of opportunities that has been enabled by and sometimes initiated by these competitive advantages. Like, for instance, the big project we just executed in Singapore, the Singapore Resid upgrade project, where it was leveraging 2 big proprietary ExxonMobil technology. So it's never been done before project. Like the acquisition of Pioneer Natural Resources, where we brought a technology toolkit that enabled us to get more out of those resources and therefore, enable deal space to allow that deal to happen. Like in Guyana, where we are leveraging our project management expertise to deliver more value from those resources for the Guyanese government people and for the -- our shareholders.

And then like new product lines like a new graphite material that's going to be put in battery anodes, lithium-ion battery anodes is going to be able to deliver faster charging and longer life for the batteries. So those capabilities are core to being able to open up opportunities. And then that's manifested in a plan that we've talked about going out to 2030 that generates a 13% CAGR earnings growth over that time period, $25 billion of earnings improvement, $35 billion of operating cash flow improvement. And it's a plan. It's not an aspiration, it's not a target, it's a plan. And that's on the back of continued growth in the Permian, continued growth in Guyana in the upstream, in Product Solutions, it's continued growth in high-value products as we high grade the yield of our product slates.

It's structural cost reductions continuing on and gives us a really nice runway up to 2030. And then we're looking beyond that as well. So we see further runway beyond 2030. Think about some LNG projects we're working on, progressing that have not been FID'd yet, but are progressing along. Mozambique, Papua New Guinea. Think about these products, the graphite I just mentioned, Proxxima coming into the fold. So continuing to look at the things that will be providing that same level of earnings growth beyond 2030 as well. But if you think about just between now and 2030, just real quick simple math here in terms of shareholder returns, the 13% earnings CAGR is that big bar that I just talked about, but that's in addition to a pretty competitive annual dividend yield and then also the accretion via share buybacks. So when you combine earnings growth, assuming we have a similar multiple and the dividend and share buybacks, you get with a pretty competitive overall total shareholder return over the coming years. So that's the simple quick ExxonMobil story. And with that, we can turn on over to some Q&A.

Well, a lot that I want to dive into there. And before we go into some of the specifics on the plan and the differentiating attributes of Exxon's portfolio, I just wanted to address upfront given the situation in the Middle East at the moment, which I know is extremely fluid. Could you just talk briefly about how Exxon is positioned to manage through these periods of volatility? And any operational or financial call-outs you want to make, please feel free to add that in as well.

Sure. Well, it's -- as you said, very dynamic, very uncertain situation, certainly mourning those lost in this operation so far. We are a top priority concern for us is our people in the region. And we have folks in Saudi Arabia, in UAE and in Qatar, and we're focused on their safety as our top priority. Coming into this, the market was -- the crude markets were -- and I'd say LNG markets as well, were very well supplied. So there's a pretty large good foundation to build off of. And clearly, this is a big disruption. And like others have, I'm sure, already said and everybody has already heard, it really comes down to how long the Strait of Hormuz is going to be closed, closed for tanker traffic.

For ExxonMobil, I mean, we have some implications for operations in the region. But by and large, when you step back and look at our global footprint, we have assets all over the world. We have upstream, downstream. We have a big trading operation that we operate a large long-term charter fleet, so we can move feed and we can move products around the world to optimize and optimize around this situation. So as you said, very fluid, very dynamic, and we're optimizing around it like others are. I just think we have a few more tools to be able to optimize that. One observation I would make in terms of how things sit in the U.S. is clearly, when you think about crude, it's a global market, and we priced accordingly, and we'll bear the brunt of that as well. But you think about physical supply of crude and supply of products and supply of natural gas in the U.S., I mean we are obviously very, very well positioned because of the shale revolution that took place over the last decade, where we have a lot of natural gas production here in the U.S., a lot of crude production, and it's positioned our refining and chemical industries very healthily, too, in terms of feed and energy costs. So we have good physical access to what we need here, but the prices obviously are subject to the global market.

Great. Thanks. [indiscernible] monitor how it all unfolds. And let's dive in then to some of the differentiating attributes of Exxon portfolio strategy, growth profile. It's notable that over the entirety of these last 5 years, this post-COVID recovery for the sector, Exxon has been an outperformer versus the broader industry and versus peers. And even this year with what's been kind of a beta rally in crude. Exxon has been one of the leaders in the sector, outperforming some of the higher oil torque small cap E&Ps that I think is noteworthy and probably speaks to some of the differentiating attributes of your strategy that appeals to a broader investor universe. So from your perspective, talk a little bit about some of the strengths of the Exxon portfolio, the strategy, what's delivered such good results? What's different than the peer group?

Yes. Thanks, Devin. I mean it really gets back to these competitive advantages that we talked about that we're leveraging. And I do think I've certainly been pleasantly surprised with the impact the organization changes we've made have really brought those advantages and allowed us to leverage those advantages more than we were able to before. The advantages are enduring and decades long to build up when you think about building up technology expertise, project management expertise, so forth. But being able to fully leverage them was really unlocked by this organization structure where we have our businesses, Upstream, Product Solutions and Low Carbon Solutions. And then we pulled out all these capabilities into these central organizations, technology, projects, operations, trading, supply chain, these big organizations that support all our businesses and allow us to really fully leverage that scale.

And so I really think that's really unlocked -- I threw out a few examples in my opening remarks and allowed us to have what I think is the bottom line of why we've outperformed because we've been growing earnings and cash flow. And we've been growing earnings and cash flow by continuing to invest in advantaged opportunities. We haven't pulled back on investment. We've continued to lean in because we have really, really good opportunities. And I'd like to think those opportunities are largely because of what we bring, the advantages we bring, and we can extract more value from those discrete opportunities than our competitors can.

So I think the other thing I would point to, and again, it's related to this organization is the structural cost reductions that we've had $15 billion so far, and we've announced going up to $20 billion. And the 2030 overall earnings growth that I mentioned earlier, I think there's some market credibility with that because we're doing a lot of the same things that we did over the last 5 years that have generated even higher than 13% CAGR on earnings growth. So it's a lot of the same structural cost reductions and same projects, same areas where we think there's a lot more room to run. And as I said, I'd like to think that the stuff we're talking about and that people see visibility to beyond 2030 is starting to impact some of how people think about terminal value for the corporation and that we can continue that growth rate longer term. And of course, that's going to have an impact on market value.

Great. So let's dive into what continues that growth rate and some of the pillars of this earnings uplift through 2030. And it's notable that you increased earnings and increased the volume outlook for one of your key assets, the Permian and the U.S. without picking up capital spending, which speaks to efficiencies and technology. Can you just talk to some of the drivers of that increase in the Permian? You highlighted these stackable technologies, including advanced proppant alongside your corporate plan late last year. Give us some of those building blocks. What's changing? What's the technology evolution of the asset?

Yes. Well, I mean that is a part of the story. We're going from 1.2 million barrels a day to 2.5 million barrels a day in 2030. And that's a lot of growth. And we're not trying to just grow more volumes. We're trying to grow earnings and cash flow and focus on the quality of the earnings. And that's where the technology has really helped us out to really -- we're starting with an advantaged position. When you take contiguous acreage position we had in the Delaware Basin and we added in the Midland Basin with the Pioneer acquisition. In both basins, we have a nice big core contiguous acreage position, which helps to set the foundation upon which to deploy these technologies. It helps you drill -- have the ability to drill these longer laterals to set up these cube developments that have and are continuing to add a lot of value in terms of our ultimate recovery and unit earnings.

So that we start with that and then you leverage in these technologies on top of that, that we're kind of in the midst of on the fly deploying. So some have been deployed, some are yet to be deployed. And so it's difficult to get good apples-to-apples, but we think we're getting 20% uplift on the lightweight proppant, which was an interesting technology because it really did -- it points to this central technology organization and having upstream and downstream researchers sitting side by side and seeing the downstream folks understanding the proppant characteristics and how that could help in terms of a lightweight proppant that's going to allow a bigger fracture and a larger effective wellbore to increase recovery. And so we're -- we've only -- we deployed that only like about 1/4 of the wells last year, about half the wells this year, and we're going to continue to ramp that up.

So that's still kind of in deployment. But really, I would say -- and we've talked about the synergies with Pioneer, and we had some reverse synergies as well, but $4 billion a year of synergy capture, that certainly helps, good acreage positions to start with certainly helps and then the technology is the big 800-pound gorilla that helps us to really drive that going forward. And we talked about the growth to 2030, but we continue to see that growth beyond that as well. So that is a big engine. The Permian is a big part of that story.

Great. So let's stick with efficiencies, but a different bucket, cost reductions. Another big pillar in growth for you all through 2030 is the cost reduction initiatives that you have in place. You've achieved $15 billion so far since 2019, $20 billion total target by 2030. Talk about where you see room from here for further cost reductions? What are some of the opportunities you all are focused on delivering?

They are important. I mean when you think about growing the business. And if you can grow the business, grow top line revenue and without cost increases because you're offsetting the growth cost with efficiency reductions, that's a powerful formula for growing the business profitably. And that's kind of what we've been doing the last several years. We've had these great growth opportunities, and we set ourselves up with tailwinds from these structural cost reductions that have helped essentially fund, if you will, the growth. And that's, again, largely come from this structure I talked about before, where you have these large organizations that are taking more of a focus on some of these areas than we were able to before.

So the one I'll mention because it reports into me, and I know it a little better than some of the other ones is supply chain. So we had supply chain set up in all our businesses before, but they're relatively siloed and we weren't able to fully leverage the scale of the corporation. So I think we had capable supply chain organizations before that were enabling us to get what we needed to manufacture our products and to get our products to market and so forth. When you pull all that together and looked at the full corporation scope of supply chain, it allowed us to make investments in that to really step change, enhance our supply chain operations.

So for instance, setting up twins, digital twins for all our marine fleet. And therefore, we're getting like a 10% reduction in fuel usage or being able to do a much better job of demand management, which is not something we've done as well a job in the upstream as we had done in, say, like chemicals or lubricants, and setting up modeling for a lot of the logistics routes that we have and the warehouses we have to reduce the capital employed, working capital. So a lot of things like that just kind of that when you're looking at across a large segment of the entire corporation add up to some significant impact. So that in and of itself is looking to be $5 billion of reduction just in supply chain over the time period. So lots and lots of opportunity. And we saw that same thing. We're seeing that same thing in operations. We just set the global operations organization. It's kind of the newest that we set up. But when you think about maintenance operations across our entire fleet, turnaround across our entire fleet, there's more to come on that.

Great. And then what about the potential impacts of new technologies and AI specifically? Can you talk about how Exxon is focused on deploying that across your business, cost reductions or otherwise and how that might flow through is going to be upside to the plan as you look out long term?

Yes, I think there is. I mean I would say, as we think about that 2030 plan, there's no material AI improvements built in. So to the extent that we can leverage AI and get benefits in a reasonably short-term time frame, that's clearly upside to our outlook. We're focused right now on -- we know ultimately, it's going to help impact productivity, and we're playing with that a bit, but I think there's more to go on that. But the real focus we're making is on the step changes. Can we look at opportunities like seismic? Can you apply AI? We have the largest data set of anybody out there in terms of seismic data. Can we deploy AI to see things that we missed before to have more of an objective lens in terms of what we're looking for in terms of seismic. Can we enhance our discovery rate?

The other thing we're doing in terms of data because I think -- I mean, I'm not telling anybody any surprise. I think data is going to be really, really key, obviously, in the whole AI space. We are going from -- we're in the process and pretty far along, over halfway through this process of going from 10 ERPs that are highly customized, a lot of customized code and not all consistent across the corporation to one instance, one SAP instance that is very -- does not have much customization at all, kind of a clean core, if you will, and so doing that, we're looking at all our processes across the corporation, making sure we're standard and structured and where we can be kind of -- we can take an SAP customer right out of the box. And then looking at all the data that goes along with that and having clean data sets across the corporation and bringing all that into one place. So we're really setting ourselves up to have a really, really good clean data structure and processes -- enterprise-wide processes going forward to really leverage that opportunity.

A lot unfolding there for sure. Let's shift over to one of your key growth assets or one of those points that you mentioned might be relevant, which is seismic and new technology there. So Guyana is where I want to go next. You've had this very substantial 11 billion barrel of oil equivalent recoverable resource estimate out there for several years now. If you think about emerging technology, the development opportunities from here and also the fact that a large portion of the block has been in force majeure and that might no longer be the case 12 months from now. How do you think about the opportunity set? And what opportunities are you focused on capitalizing on as you monetize the asset going forward?

Well, look, that's a real pride point for us, the Guyana operation. And as a matter of fact, I was just down there last week. And boy, it's just -- that's one of the really fun things about this role is I get to go visit and see what our teams, our Upstream project operations teams can do on the ground when you have a resource like that. And it's incredibly impressive what we've been able to -- with 4 FPSOs out there over 900,000 barrels a day, building an organization there, a lot of developing the Guyanese, interfacing with those folks, it was -- it's truly, truly impressive. 11 billion barrels -- 11 billion oil equivalent barrels is a tremendous resource. It is a huge resource.

Back in 2018, that number was a little bit over 3 billion. And so -- and a lot of that was just success after success. And as I mentioned earlier, our project management team have been able to extract even more value by getting these new FPSOs on under budget and faster than scheduled. So it's just been a tremendous effort. Guyana will benefit from 4D seismic from day 1, if you will. We have base seismic over the whole thing. We're already shooting 4D. So that will be a huge uplift in terms of the ability to optimize recovery across that asset. And then as you said, Devin, I mean, this -- the block we have in Guyana is the size of Massachusetts. So it's a large block. And a bit over 1/3 of it has been inaccessible because of border disputes.

And hopefully, that will be cleared up within the next year or so and allow us to go in and it's prospective and allow us to go in and start gathering data and hopefully drilling some wells in that area of the block. So I do think there is upside going forward. I do think what we have is incredibly impressive and only half of the boats are out there right now. We have 4 FPSOs producing. We have 3 more under construction right now and one more that's going through approval processes. So a lot more growth in terms of actual earnings and cash flow to come. And we'll continue to work on -- if there's more than 11 billion barrels out there, we're going to find it.

All right. Good stuff. So the border dispute in the force majeure is tied to Venezuela. And maybe we'll just address that quickly since it's been topical so far this year. Just talk about where Exxon stands on sending a team in to evaluate, as you all talked about in the past. And what would need to happen for Exxon to make investments in a country like that? How do you contrast return versus the other deep set of opportunities you have broadly across your portfolio?

We have -- so we have an evaluation team that we've kind of put together. We have -- there's an OFAC license that would allow us to go in the country. We're working logistical and security arrangements right now. So within a few weeks, I'd say we're probably going to have a team in country starting to look at get boots on the ground. Obviously, we've been in Venezuela before. We've been expropriated twice. We know the asset. We know the resource pretty well. We had a very successful operation there. I recall it fondly, really good operation before. So no doubt, we can go in there and replicate that. And I would say, even enhance that because the heavy oil technologies, we've continued to -- through our Canadian affiliate through what we've been doing up there at Kearl and Cold Lake, we've continued to refine some of the heavy oil technology, and that would be applicable there as well in Venezuela.

So I think we can do even better than we were before in terms of technology toolkit that we can bring. Obviously, we would need to see some changes in terms of the physical regime there and security arrangements to make sure that we would have something we can take comfort in, in terms of being able to have a long-term operation without getting kicked out. So I think we'll continue to look at that and work with the Venezuelan government to try to get the right terms in place. And if we can get those terms in place, and we will be interested in going back.

Okay. Makes a lot of sense. Let's stick on this theme of emerging opportunities and how that might translate to longer-term growth. You mentioned one of the goals of Exxon and the Exxon management team is to make sure you extend that growth runway beyond 2030. What are some of the opportunities that you all are focused on when you look at the next decade and what might facilitate or extend the attractive growth rate you all delivered on in the past in the future?

Yes. Good question. And I think, like I said, I think a lot of the contours are coming into place. The first thing I'll mention is we're working right now on some prospective LNG projects in Mozambique and then an expansion of our PNG LNG. And neither one of those would be ringing the cash register before 2030. So those would all be kind of 2030s projects. We're -- as I mentioned before, Permian, we continue to see growth in the 2030s. Guyana, hopefully, we'll continue to have 2030, 2031 FPSOs out there. So that will provide some growth. In Product Solutions, we have a large chemical franchise, large chemical business and a lot of growth and demand for our high-value products, and that would be something we'd be growing in the 2030s for sure.

Continuing to work on high-grading the yield at our integrated manufacturing facilities. And 2 areas where technology has really played a big role, these new products that we have. I mentioned the graphite that is basically a synthetic petroleum coke product that we have found a way to manipulate the molecules to generate those improved -- improved performance that I mentioned earlier. So that looks really, really strong, and that will be largely be a 2030s type story, may get a little bit in 2029, but mostly a 2030 story. And then you may have heard us talk about Proxxima, which is a new material that we'll be working on, and that's probably, again, a little bit before 2030, but most of the runway there is in the 2030s. And that is a very versatile new material.

Think about taking that into infrastructure, it's 75% lighter than steel and twice as strong. Think about taking that into coatings where it's corrosion-resistant and some applications right now that would take 3 coats, we can do in 1 coat. And so we think about marine vessels and recoating those and how you could reduce a shipyard visit, think about tanks and so forth getting us back in service, a lot, a lot of upside in that. It's going to take a while to kind of get these into formulations and get that moving, but we're very excited about that product. And it basically is both the graphite and Proxxima. Proxxima ultimately coming from a gasoline stream, a blending component in gasoline would be the feed into our Proxxima. So we're taking basically converting gasoline into different high-value products. And then as I mentioned, graphite is a resid stream coming out of our refineries as well. So really optimistic on that as well. And I think it just plays again to this technology theme, this central technology organization that has always been there. We've always had tremendous technology capability, but focusing that, harnessing that, we've been able to really leverage and take it to the bottom line impact. So pretty excited about all that. And all that's 2030 plus.

Great. I'm glad you mentioned Product Solutions and these new business opportunities. I personally think they are some of the more interesting and also underappreciated drivers of long-term growth for the Exxon portfolio and really differentiate you and your strategy versus the peer group. For Product Solutions specifically, it's also been a big year over the last 12 months of project starts for you all. I was wondering if you could just talk a little bit about the expected earnings contribution as everything ramps and specifically on some of the chemicals expansions you have come online, how that all fits in with the current macro picture for the [indiscernible] market and asset base, right now?

Yes, that's good. So -- and if you look at Product Solutions, our Product Solutions business, which is think about fuels, lubricants and chemicals altogether. And we've talked about between now and 2030, that would be a $9 billion earnings improvement and over that time period, which is essentially kind of doubling earnings on this kind of mid-cycle basis. So we're trying not to call the market on what we think the market is going to do, but just take the average mid-cycle margins on those 3. And as you mentioned, chemicals has been below that for the last year or 2. And there's various projections on it staying low for several more years. But as you think about that margin across our Energy Products, our Chemical Products and Specialty Products, the fourth quarter '25 total margin environment is about what we're expecting.

So by 2030, that 2030 number would be a -- based on margins that are consistent with what we had in aggregate in fourth quarter of '25. So Energy Products was above the average. Chemical Products was below. Specialty Products were somewhere about on par. So combined, it's kind of that same margin environment that we're depending on. So we're not -- this is not -- our earnings projection is not counting on some big run-up in terms of margins. It's counting on, number one, the structural cost reduction we already talked about. Number two, the contribution from central organization. So I talked about supply chain earlier. A lot of the benefit from the supply chain is going to manifest in Product Solutions and some of that in operating expenses, but some of that in cost of goods sold.

So it will accrue to margin and higher margin. We have the projects we brought on. So you mentioned our chemical project we brought on in China. I mentioned the Singapore project that we had online. We had another big project in the U.K. at our Fawley refinery. We had a renewable diesel project online in Strathcona in Canada. So all of those, we have not seen a full year of operation for those and the full year production. So there's more coming with those. And then in the China asset, we still have not gotten that fully on to the Performance Products or making some commodity products. And so we're in the process of getting the product slate that we want out of that facility. And so we're pretty optimistic once we get that up and running and on the right product slate that we'll be doing well there. So a lot on the projects, and that's a big part of it, but we've got a lot of other kind of ores in the water too, solutions.

Excellent. Maybe we could spend a moment just on capital allocation priorities. You all have indicated a plan to buy back $20 billion of shares in 2026, assuming reasonable market conditions. I mean 2 months ago, the debate would have been around lower oil prices. Now things are trending higher, at least for the time being. Just talk about your approach to shareholder distributions, especially buybacks? And how do you think about buying back shares with Exxon stock close to all-time highs at the moment.

Yes. So we have -- it's a pretty easy question for us. I think we're pretty clear on our capital allocation. First and foremost, we're going to invest in the business. And it gets back to -- we have great opportunities. We have a deep pipeline of opportunities, and we're going to invest in those opportunities. And that has served us well. And again, it's those competitive advantages that it's a virtuous cycle. They're going to generate more opportunities. When you invest in those opportunities, it's going to continue to grow cash flow. Second thing is we want to make sure we maintain a strong balance sheet because we want to continue to invest in the business throughout the cycle. So when you have throughout the run-ups in prices or down in prices, we all know it's a pretty cyclical business.

We want to steadily continue to invest in the business. And to do that, we need that good strong balance sheet. So we want to maintain that. We've done a really good job of that. We're 11% net debt to capital right now. So we feel like we're in really good shape there. And then we want to reward our shareholders. And the first way we reward our shareholders is with the dividend, and we've grown our dividend for 43 consecutive years. We are very sensitive to the retail shareholder base that really relies on that dividend and that dividend growth. And we continue to have conversations on the amount of dividend growth with the Board and so forth. But we -- with a 43-year track record, you can assume that we're trying to maintain that strong record of growing dividends.

And then the way we're thinking about buybacks is a couple of things is, one is staying to the extent we can, and it's the last leg on the stool, if you will, but as best we can, staying relatively ratable. So we talked about -- we were at $15 billion, we talked about $20 billion last year and this year. And if you stay relatively ratable there, then we're not trying to estimate where our stock price is going to be, whether it's low or high. And the other thing about that is it really does help with -- if you're increasing your dividend, then you're increasing the absolute dollars out the door and having fewer shares outstanding does help with that increasing dividend. And we are the second largest dividend payer in the S&P 500 right now. So that is quite a bit of cash going out the door. So that's kind of how we think about it. It all starts with investing in the business, maintaining the balance sheet and then rewarding our shareholders.

Makes a lot of sense. And our last minute here, I'm going to squeeze one more in for you. Having strong stock price and some of the technology advantages that you talked about before also could create opportunities for further consolidation. So I was wondering, given the success of the Pioneer deal, how is Exxon looking at further M&A in the landscape more broadly? And please answer that not just upstream, but broadly across your portfolio.

Yes. Thanks for the opportunity to squeeze that in, I may go a few seconds over. Look, we recognize that we're going to be continuing to grow earnings and cash flow in the business. We have really good organic opportunities, but we want to make sure we're looking at inorganic opportunities as well. And to make that work, to make M&A work, you have to bring something to the party. You have to bring something that opens up deal space beyond just G&A synergies. And so for the Pioneer deal, like I mentioned, the technology to have improved recovery in the Permian and some of that being already deployed, some of that being us basically betting on ourselves, betting on our technology organization, opened up that opportunity.

And I do think that is having technology, having something that others don't have in terms of not only just a set of opportunities we have today that we point to the 40 stackable technologies, but also an organization behind that, that you know is continuing to innovate coming other way gives you the confidence to kind of step out on some of those things. So I do think we're going to continue to look. Obviously, you need a buyer and a seller, and that's a space for us, not just in the upstream and the unconventional, but also across our portfolio.

I mentioned a couple of these technologies that we came out with. the Proxxima technology and also the graphite, there was 3 acquisitions in there that really kind of made those things work. We had a good bit of the technology equation. We needed a little bit more and that full equation with the acquisitions kind of made up -- got all the puzzle pieces together. So I would say it's across all our businesses, including Low Carbon and Product Solutions, but also across our technology. So it's an important tool in the toolbox and one that we're more and more making sure we can leverage.

Okay. Great. Well, we covered a lot of ground there. Really helpful update, great dialogue. I appreciate the time, Jack, and thank you all for joining us here in the room and tuning in on the webcast. We will wrap it there.

Thank you.

Good morning, everyone. Welcome to ExxonMobil's Fourth Quarter 2025 Earnings Call. Today's call is being recorded. We appreciate you joining us. I'm Jim Chapman, Vice President, Treasurer and Investor Relations. This quarter's presentation and prerecorded remarks are available on the Investors section of our website. They are meant to accompany the fourth quarter earnings press release, which is posted in the same location.

During today's presentation, we'll make forward-looking remarks, including comments on our long-term plans, which are subject to risks and uncertainties. Please read our cautionary statement on Slide 2. You can find more information on the risks and uncertainties that apply to any forward-looking statements in our SEC filings on our website. We also provide supplemental information at the end of our earnings slides, which are also posted on our website.

And now I'll turn it over to Darren for opening remarks.

Good morning, and thank you for joining us. In 2018, we set out to transform ExxonMobil to fully leverage our unique competitive advantages. The results we share today demonstrate the significant progress we've made. We've built a higher return, lower cost technology-led company, one that delivers superior results across market cycles. Our strategy, our advantages and the structural value we're creating puts us in a league of our own.

2025 was a year of exceptional execution and technology-driven differentiation. We continue to deliver strong safety and reliability performance, reflecting the commitment and operating discipline of our workforce. We've already achieved our 2030 emission reduction plans for GHG emissions and flaring intensity.

As of 2025, we reduced our corporate GHG intensity by more than 20%. And reduced upstream GHG intensity by more than 40% and reduced corporate flaring intensity by more than 60%. We expect to reach our 2030 methane intensity reductions by the end of this year. Upstream production averaged 4.7 million oil equivalent barrels per day with unit earnings more than double those in 2019 on a constant price basis.

We successfully delivered all 10 key 2025 projects further strengthening our portfolio and positioning us for long-term profitable growth. And we continue to high-grade the portfolio by maintaining our disciplined approach. That approach is the same as it's been since we rolled out our strategy: increases investments in an advantaged portfolio, divest nonstrategic assets and significantly lowers cost. Bottom line, we're improving our mix and structurally reshaping the business. Results are clear, industry-leading earnings power, stronger cash flow potential and more profitable barrels and products.

In the Upstream, production from advantaged assets, including the Permian, Guyana and LNG continues to grow. These assets have lower cost of supply, lower emissions intensity and higher returns. We expect them to make up roughly 65% of total production by 2030.

In Product Solutions we strengthened the portfolio with advantaged project start-ups and high-value product growth, transforming lower-value molecules into higher-value products. These projects are expected to drive meaningful earnings growth through 2030 with 60% coming from assets already online. We're delivering consistent ratable organic growth, anchored by our advantaged assets and projects that are expanding earnings power over time.

Our fourth quarter and full year 2025 financial results reaffirm that our transformation is driving improved earnings power across a broad range of metrics. Over the past 5 years, our annualized shareholder return of 29% has led the industry, supported by $150 billion of distributions to shareholders during that period. Earnings, cash flow and return on capital employed remain among the strongest in the sector with higher upstream earnings per barrel and structurally higher returns.

We continue to increase our structural cost savings in 2025, significantly outpacing competitors. In fact, our captured savings is greater than all other IOC savings combined over the same period. These improvements continue to deliver industry-leading earnings and cash flow even in periods of lower commodity prices. Our industry-leading balance sheet, structurally lower breakevens and level of short-cycle investments give us unmatched flexibility through the cycle.

During the year, we completed $20 billion in share repurchases, retiring shares equivalent to 1/3 of those issued during the Pioneer transaction, significantly reducing the dilutive impacts of the acquisition.

Let me turn to two of our most advantaged growth engines: Guyana and the Permian, which both continue to set records. In Guyana, we continue to deliver results never before seen in our industry and have set new standards for operational excellence. Our most recent project, Yellowtail, came online ahead of schedule, raising gross production in the fourth quarter to roughly 875,000 barrels per day. Altogether, our first 4 FPSOs are now producing 100,000 barrels a day above the investment basis, reflecting our operational performance to date and the value of this advantaged asset.

Turning to the Permian. We delivered a new production record in the fourth quarter, 1.8 million oil equivalent barrels per day, driving the highest annual company production in over 40 years at 4.7 million oil equivalent barrels per day. Technology deployment continues to be our primary focus with lightweight proppant deployed during 2025 and roughly 25% of wells. We expect that number to reach 50% of new wells by the end of this year. With more than 40 stackable technologies in various stages of testing and deployment, we expect to continue growing production at lower capital cost far into the future. Simply put, there is no near-term peak Permian for us. Our growth trajectory remains robust, and we expect to exceed 2.5 million oil equivalent barrels a day beyond 2030.

The role of technology and growing value can be seen across all of our businesses. For instance, Proxxima Systems continues to scale. We've more than tripled capacity this year with growing opportunities across rebar, coatings, automotive and oil and gas applications. Our Proxxima base rebar delivers a 40% improvement in installation efficiency versus steel and deliver superior strength, lightness and corrosion resistance. We recently leveraged Proxxima-based rebar to build the foundation for a new overpass at our Kearl site after our technology team in India worked with our upstream team to qualify in a heavy industrial application.

In Carbon Materials, our advanced battery anode graphite program is showing exceptional performance, delivering 30% faster charging, up to 3% higher available capacity and up to 4x in battery life.

In Singapore, our Resid upgrade project demonstrated full capacity performance, validating proprietary catalyst technology to convert low-value fuel oil into higher-value lubricants and diesel.

Our carbon capture network continues to advance. We made progress on the Rose permit, brought our first third-party CCS project online, capable of storing up to 2 million tons per year and secured our seventh CCS contract. Taken together, these projects represent approximately 9 million tons per year of sequestered CO2.

As you've heard me say before, Execution excellence remains a hallmark of ExxonMobil. We commenced start-up activities for all 10 key projects meeting our 2025 goal. These included Golden Pass LNG and the Proxxima systems expansion. This was a record year for us in project startups, and each will play an important role in further strengthening our global portfolio in supporting long-term shareholder value.

On average, our global projects organization executes about 3x as many mega projects as the nearest competitor. They do this at up to 20% lower cost and 20% faster delivery schedules than the industry average. This is a testament to our disciplined approach and organizational expertise.

Our transformed company will continue to build on this success in 2026 with higher structural earnings power, stronger mix, lower breakevens and a portfolio designed to perform across commodity cycles.

Our strategy is working, and the benefits are evident in operating performance, cash generation and shareholder returns. We're capturing more value from every barrel and molecule we produce and building growth platforms with scale. We're focused on high-margin technology differentiated markets, where our integration, process expertise and global footprint give us a durable, material competitive advantage.

Our capital priorities remain consistent and disciplined: invest in competitively advantaged opportunities, maintain financial strength and return surplus cash to shareholders. We're maintaining a measured pace of share repurchases subject to reasonable market conditions while preserving flexibility to invest through the cycle. Underpinning all of this is a new enterprise-wide process and data platform that is changing how the company operates with redesigned end-to-end processes in connected data, transactions and decision-making across every business, geography and function. It will enable us to learn and act faster and better leverage our scale accelerate the adoption of artificial intelligence and integrate new solutions. It's already delivering results with much more to come.

2025 again demonstrated that the advantages we've built, the capabilities we've developed and the performance we're delivering is creating industry-leading value for our shareholders today and far into the future.

Thank you, Darren. Before we move to Q&A, I have a few quick announcements to share. First, on February 2, we're launching a new individual investor-oriented page which can be found within the main Investors section of the Exxon Mobil website. Our individual investors make up nearly 40% of our shareholder base, and this new site caters directly to their needs.

And then on February 20, we'll be releasing a refreshed version of our company overview presentation. Both of these can be found on the Investors section of our website, and we encourage you to take a look.

With that, we'll move to our Q&A session. [Operator Instructions] And operator, please open the line for our first question.

The question-and-answer session will be conducted electronically. [Operator Instructions] The first question comes from Devin McDermott of Morgan Stanley.

First, Kathy, I just wanted to wish you all the best, and thank you for your help and positive contributions to Exxon in your time as CFO, and really looking forward to working with you again in your new role.

I wanted to ask actually about Guyana, Darren, one of the two key growth in your upstream that you mentioned. The exploration license on the Stabroek Block is set to expire in the back half of 2027, but you've also had a large portion of the position under force majeure as it sits in waters that have been disputed by Venezuela. So I'd love to hear your latest thinking on the exploration strategy, leading up to that scheduled expert in the legacy position and then your view on the opportunity set for this force majeure area. Could it qualify for an extension? And what are some of the milestones to get into work on evaluating the resource potential?

Yes. Sure. Devin, and thanks for the question. I think what you see us doing in Guyana is continuing in the areas that we do have seismic and have been developing continue to take what we're learning through the wells that we're drilling in our development program to identify additional targets and drill, and we still think there's opportunity in that space to explore in the block that we can currently access. And then, of course, as we roll forward and have to relinquish out pieces of the block, we do that based on, I think, a very well informed understanding of the geology and the opportunity sets.

The portion of the block that's under force majeure as a result of the border dispute remains there. And I think from my perspective, one of the unlocks with respect to that region will be the ruling that comes out of the International Court of Justice that's the process that Guyana has been going through with Venezuela to align on the -- which resolve the border dispute. So I think that will be a critical milestone. Obviously, with the developments in Venezuela, perhaps we'll see an opportunity to -- with less naval patrols, that will make a little more friendly environment. So we'll see how that goes. But we've got plenty of work ahead of us here in the short term and then longer term, we'll get into that additional acreage and see what the opportunity looks like.

We're pretty optimistic. I think one of the advantages of force majeure is it poses the clock. And so we will have an opportunity to do what we need to do in that portion of the block when it's available to us.

The next question comes from Neil Mehta of Goldman Sachs.

Yes. I'd just like to echo Devin's comments, Kathy, thank you for everything and enjoyed the partnership and Neil, welcome as well. I'd like to focus my comments on the Permian. It looked like a very good fourth quarter, Darren. You exited around 1.8 million barrels a day. Your guide for this year is 1.8 million barrels a day. If you look at the volume cadence over the course of the year, do you see upside potential to it? And just talk about the lightweight proppant opportunity that you continue to see and deploy out in the field and is that manifesting itself in potential upside to numbers?

Sure. Thank you, Neil. I appreciate the question. The one, I guess, point I'd start with is I guess I'd caution extrapolating a quarterly result to an annual result. If you look at the annual production that we had in the Permian, that was a significant improvement year on year, and we expect to see that significant improvement going into 2026 versus 2025 on an annual basis. And I think what you saw in the fourth quarter demonstrates that capability. But we've always said the quarters are a little lumpy as we bring on cubes and the timing of -- as those cubes come on. So we're still feeling pretty good about the developments that we've got there and pretty good about the plan that we've laid out and the volumes that we've communicated to all of you through the plan updates.

With respect to the technology, I would tell you, we just had a review of this the other day with the technology group, a lot of enthusiasm for what we're seeing. I would tell you nothing -- everything basically points to, if anything, greater promise. Obviously, we've got to demonstrate that in the field. we've been deploying that pretty consistently, as I mentioned in my prepared remarks, we're going to continue to do that.

There are other technologies as we've talked to you about as part of the corporate plan update that, frankly, holds a lot of potential as well, and we're beginning to kind of feather those in. And so the challenge will be the time it takes to develop the cubes.

And I guess one point I would make is we're not changing our approach of maximizing ultimate recovery. And so we're still very focused on bringing these technologies to bear in our cube design focused on maximum recovery and doing it at a lower cost.

And so doing the cubes, doing that -- those designs and then drilling those and bringing them on takes longer for us to see the results, but ultimately gives us much better results. And so that continues to happen. And I think as we get through this year, we're going to begin to see a lot of these -- some of the additional technologies that we're bringing to bear kind of manifest themselves in our results. And I feel, again, pretty optimistic that they're going to deliver some very promising results as we move forward. And frankly, from what we've seen today on a conservative basis, that takes us well beyond 2030 with our production.

And I'd just add, Neil, if you look at the annual numbers in the Permian, we expect to be up about 200,000 koebd kind of year-over-year. Again, that's not going to be necessarily what you see each and every quarter.

And then on lightweight proppant, this year, about 25% of our wells had lightweight proppant. By the time we get to the end of next year, at that point, when we're drilling, we should see about 50% of our wells having lightweight proppant. So a very good performance in terms of just increasing the lightweight proppant in new wells going forward, and we'll see that benefit, as Darren said, over time.

The next question comes from Doug Leggate of Wolfe Research.

I'll add my best wishes to both the outgoing and incoming CFO. Good luck, Kathy. I hope you feel better. My question is not about the dividend, Kathy, you'll be delighted to know I'm not going to do that to you.

I'm shocked, Doug, you're not taking one last crack at it.

Not all. Neil will have to pick that baton up from here. But Darren, I do have a question about what's not in the portfolio through 2030. And I'm thinking specifically about -- last August, I think it was you signed an MOU in Libya. We're seeing improved PSC terms in Iraq and are speculation you guys are potentially reentering there. And then, of course, there's the question over what it would take for you to reenter Venezuela. So I wonder if you could address what's not in the plan through 2030 that could surprise on the upside?

Yes. Thank you, Doug. And you're right, there are some of these markets that have significant potential with respect to resources and the challenge going back in time has historically been accessing those resources with the right kind of fiscal regime and the right kind of call it, legal infrastructure investment guarantees a number of those things that have made it difficult to enter with the confidence that we need to compensate for the risk associated with what we do in the business of developing these resources. That, I think, over time, has begun to evolve. The recognition that many of these resources have their challenges are difficult to develop, and they need capabilities that don't exist within the country. And frankly, lends itself directly to the work that we've been doing to really differentiate Exxon Mobil from our competitors based on this intense focus of driving competitive advantage, driving our developments in technology, driving project execution and development and more recently, the work that we've done to consolidate all of our operations so that we operate with executional excellence. And so I think those things begin to provide an advantage to not only accrue to the company but accrue to these resource owners. And the faster that we bring on the production, the lower cost that we bring that production on and using the technology, the higher the recovery rates all directly go to the resource owner and the benefit of the resource owners. That advantage, I think, is being recognized today. And as a result, we're getting an opportunity to look at a number of these locations and start working with them to see if we can't come to a contractual arrangement with the right kind of fiscals that reward us for the benefits we bring and reward the resource owners with a higher value proposition.

I'm pretty confident that we're going to make some progress that today is not in the plan for some of the areas that you've referenced. So I do think there will be some upside out there. But as you know, Doug, these things tend to take some time. And as we develop them and we get more surety around some of those things, we'll obviously bring those into the plan and talk to all of you about that when it gets to a point that we've got the confidence to start baking them into the plans. But I do think work we've been doing to strengthen our capabilities is going to have a huge payoff with respect to that.

Darren, if I may, at the White House, you said Venezuela was uninvestable, but you might be prepared to put a technical team in country. Has any of that happened?

Yes. So what I would say is -- what I said at the White House was, given the current fiscal structures in place: legal, that you couldn't invest, but that there was opportunities to address that. And I did feel like the Trump administration is committed to doing that. In fact, if you look at what they're currently focused on, it's stabilizing the country, kickstarting the economy and then ultimately transitioning into a more representative, democratically elected government. I think those are the right objectives that the government is working on for the benefit of Venezuela and the Venezuelan people that Venezuela has got those challenges that I mentioned, which I believe, with time, will get addressed. The other challenge with Venezuela is those barrels are high-cost barrels. And so you need capability to bring that to market with the right kind of technology to get low-cost supply out there. Frankly, we have that with the work that we've done up in Canada and the technology organizations focus on developing heavy oil resources. We think we bring an advantaged approach that will lead to lower cost production, higher recovery and therefore, more economic barrels onto the marketplace. So that's, I think, the opportunity set for us that will play out maybe over time.

With respect to the team, I offered up, given the challenges. To send a team there to do the assessment and to offer up our perspective and what we found to the administration to help them in their decision-making as they lay out the policy. We're still committed to doing that.

The next question comes from Bob Brackett of Bernstein Research.

And a bit of a follow on to Doug's question. The underpinning of your upstream production growth are these advantaged assets, namely Guyana, the Permian and LNG. As you think -- and you basically have a fairly clear line of sight into the 2030s, you all tend to think even longer than that. So as you think about refreshing the upstream portfolio even further out, is there a requirement that assets you add to the portfolio have to be advantaged assets? Or will you soften that requirement? And I have a brief follow-up.

Yes. And so maybe the way I would characterize it slightly differently, Bob, is the advantaged assets are -- the advantage derives from what we bring to the development of those assets, not necessarily in the resource itself. And so my challenge and the way we make these investments advantaged is by bringing a unique set of capabilities that delivers more than what the market or our competitors or what the average can deliver, that advantages those investments. And I would tell you that that's not going to change for us. I continue to see with the transformation we've been making in the company, the consolidation of [ like ] activities across this very broad and diverse portfolio and to centralized groups that focus on driving excellence in each of these areas that we continue to see huge opportunities to improve performance and keep getting better at what we're already pretty damn good at. And so I think all of that will lend itself to then when we go into a market or into a new resource bringing an approach which is advantaged versus a market rate and therefore, a return that's advantaged. And that's how I would think about it. And I'm actually convinced that as where we sit today, there is upside to the advantages that we can bring. And therefore, I would expect going forward that we'll continue to see that even as we go into new places and continue to grow the business.

And I would just add to that, Bob. I mean, as you know, this is a long-cycle business and return on capital employed is really key performance indicator of how well we're deploying that capital. And if you look over the last 5 years, our ROCE has averaged 11%, 2 percentage points above our next closest peer. So I think that just speaks to the discipline and us focusing on those competitive advantages we bring to the table to just drive higher returns consistently.

Yes. Very clear. A quick follow-up. The Permian, as an advantaged asset, is a combination of acreage, which is finite and technology, which is scalable. Can you talk about how you can scale the Permian technology toolkit? Is it scalable just within U.S. shale? Just within shale? Or is it perhaps scalable to a range of future extractions?

Yes, I think it's a really good question. And I do think it's scalable. I mean one of the great things about having the technology organization that we have and then having consolidated by capabilities across our businesses into a single technology organization is we have a very diverse set of experiences and very core technology areas that are contributing to solving problems across the entire portfolio. So we're getting a lot of input from our technical experts that have grown up in different parts of the business, but now bring that experience to bear on new areas and new opportunities. So I do think we will find that as we discover and innovate particularly for the Permian that, that will have applications across a lot of the things that we do in the upstream. In fact, we're already seeing that. Likewise, what we're doing in some of the deepwater has applications. So this -- we're not -- one of the advantages of this centralized approach that we've put in place is we're not trapping any of the innovation in any one part of the organization. It is free to flow and move to the highest value opportunity set within the company. I think that's a huge unlock that, frankly, most of our competitors have trouble matching.

The other final point I would make there is you're right about the limits in the acreage, but I continue to challenge our folks. We're not -- the industry as a whole, the recovery rate of the oil that we know is there is still, in my mind, way too low. While we're working to improve the recovery of what we're doing on a go-forward basis. I'm also quite focused on cracking the nut of how we can go back and improve the recovery for things that have already been played out. And I think there's an opportunity there that I'm hopeful that our technology will unlock here in the future.

The next question comes from Arun Jayaram of JPMorgan.

My question is on LNG. You're on the cusp of first cargoes at Golden Pass. I was wondering if you could update the market on Exxon's plans to pursue FID decisions at Papa New Guinea and Mozambique. And perhaps talk about how these projects sit on the global cost curve versus perhaps Gulf Coast LNG?

Yes, sure. Thanks for the question. I would tell you, so maybe starting with the back end of your question, and then I'll circle back around to the progress on Golden Pass. But with respect to the competitiveness of what we're trying to do in Mozambique and Papua New Guinea, as I talked about and have been talking about for many years now that as part of any of the projects that we FID and the developments that we put in place, they have to be cost competitive. They have to be advantaged versus the rest of industry. They have to be on the low end of the cost of supply curve or we will not progress those. And so the simple answer to how we're looking at Papa New Guinea and Mozambique is the work that the projects organization has done to drive the -- to develop the project design has led to those being very cost competitive, [ a very ] advantage with respect to the market. And so we feel good about the competitiveness of those. Obviously, there's challenges to continue to work our way through, but we feel like we've got a very good basis for progressing those projects. And my expectation is with Mozambique, we'll see something here as we move through this year, probably on the back half of the year with respect to an FID if things go, kind of, to plan. So feel good about that.

And I would tell you that the time -- the delay that we've had with the force majeure in Mozambique, I mean, we weren't sitting in our hands during that time frame. We were challenging our project's organization to keep driving innovation and find ways to reduce that cost, and they were very successful at doing that. So we actually use the delay productively to come up with what we think is a much more cost advantage designed than we had originally. So as we learn and get better across this portfolio of things that we're doing, the opportunity is in there for us to fold them into the next development, and that's certainly the case in Mozambique. So we feel good about those and the same with Papua New Guinea as we work our way through that development.

With respect to Golden Pass, I would just say that venture has done a really good job of recovering from the bankruptcy. Obviously, that was a huge break but really got back on track and feel good about the progress they've made and mechanically completed that project in the fourth quarter of last year. We're basically into commissioning and start-up now. My expectation is we will see kind of first LNG produced in very early March is what it's looking like right now.

The next question comes from Betty Jiang of Barclays.

It's on the [ corporate-like ] data system transformation, Darren, that you alluded to earlier, just wanted to get more color on what that process entails? And how should we expect this to manifest maybe financially across the portfolio? Is it just more structural cost savings, better productivity? And just how material could it be over time?

Yes. Thanks, Betty. Yes, it is a very material part to the transformation that we've been on. And just to kind of maybe set the context of what we're doing. And if you go back in time with the way we had organized the company, we had actually delegated the development of the systems and the systems that support the businesses to the business themselves. So we had a number of different ERP systems, more than 10 across the scope of our operations. And over time, each of our businesses and organizations develop their own data construct, their own data nomenclature. And so it made it very, very difficult for us to really take advantage of the scale across all of our businesses in areas where we had a whole lot of duplication or similarities.

As we started the restructuring in 2018 and aligning all of our businesses into value chains and then pulling out some of the centralized organization, as we've talked about, we've made huge progress with that work in terms of delivering structural cost savings, $15 billion to date through 2025. And as I said this morning on the call, that's more than any of our competitors combined. And that is a function of and driven primarily by the discipline that we have. It's the same discipline we had when we chose to invest during the downturn when everybody else was stepping back from the marketplace and hunkering down. It's that same discipline that we had and not investing in the green businesses where we had no real advantages, no real expertise even though many in our industry chose to go in that direction. It's the exact same discipline we've had in rolling out the new operating model which is different than what anybody else in the industry is doing to their day. And that model is allowing us to deliver the [ business ] that we have. And that model and that discipline is going to underpin this new ERP system, one data construct for the entire corporation, one data set, one set of nomenclatures, it will be the first time in the history of this company that we can actually tap into everything that we're doing across the company. And when you couple that with the opportunity with AI and the data set that, that represents, I don't think there's a company out there that can match what we're trying to accomplish here. And the progress that we're making, despite the scale of this has been really, really impressive. We remain on schedule and on track and we're beginning to see the benefits accrue even now. And maybe I'll let Kathy touch on that because that is one of the areas in her portfolio that she's been driving.

Thanks very much, Darren. So just to give you a couple of stats to understand where we've come from and where we're headed to, all companies need to -- who operate on an SAP platform need to upgrade as SAP has moved to S/4HANA. And so we were facing a need to upgrade. But we historically, as Darren said, operate at more than 10 ERP systems. We did it on-prem, and we had more than 65 million lines of custom code in that, the highest of any of SAP's customers. As a result of that, we couldn't easily take upgrades to software, right? So we couldn't benefit from that because of the cost of having to plug the new upgrade into what was a very bespoke software system that we had created was just too high. We as a result of now having centralized organizations are able to really standardize simplify our processes. We're going to have 97% fewer profit centers. 70% fewer cost centers. And the core of our platform is going to be clean, which allows us to take upgrades easily. In fact, during this design period, we've already taken at least one upgrade into the development platform that we're utilizing. And we've had some early wins as we started to implement some of the software that surrounds the system. So we had a successful implementation of group reporting a BlackLine, of some supply chain technology that pushes us much more towards not just automation, but being able to use artificial intelligence to do things like plot out the logistics across our system for things like marine. So it's a really big change, but we will both get a great simplification, automation and the ability to apply AI at scale much more easily. Thanks very much for the question.

Yes. The other thing I'd just add as a final point is by -- through that automation, we're really allowing -- freeing up time for our folks to focus on the things where they can add unique value. So not only are we getting a lot of efficiencies. I think we're going to see the effectiveness improve. So we'll basically benefit on both sides, both the revenue and the cost side.

Yes, a much better experience for our people who still today spend way too much time I'd say, sorting through our data and information and reporting the numbers as opposed to higher level activity that's really driving insights and actions across the business.

The next question comes from Steve Richardson of Evercore ISI.

I was wondering, Darren, if you could talk -- we're seeing a pretty robust asset market out there in terms of where private and other assets, not only in the Lower 48, but elsewhere transacting. I was wondering you can talk about maybe the role of divestitures and potentially contract expiries and legacy assets. I think you've been very clear on the uplift that's coming from your upstream in terms of margins with the advantaged assets, but the other piece of it is what could be leaving the portfolio potentially to accelerate that margin uplift. So just wondering if you could talk about the environment as you see it there.

Yes. No, thanks. I think -- and you touched on one of the areas that has been a pretty concentrated focus for us really over the last 5 years, just around as we bringing new opportunities, bring technology to play, grow these advantaged assets is focusing our efforts on that. And for the assets that we have out there, that then no longer compete in the portfolio because they don't have the same opportunity that we have with the rest of the portfolio as an opportunity to sell that off to others who don't have the kind of depth in advantaged projects that we have. And so we've been going through that fairly rigorously very thoughtfully. We're not rushing. We're going to find buyers who place a higher value on it than we've got. And we've been very successful with that, as we've talked about over the quarters with respect to the amount of divestments that we've had. In fact, I think the number is up to $25 billion since 2019 with divestments that we had both from the upstream in our Part Solutions business. In fact, just last year, we closed our sale of our French affiliate. And so there's -- it's been a continuous making sure that what's left in the portfolio can compete for capital is advantaged versus the rest of industry and then making sure that they're at the left-hand side of the cost of supply curve. So low cost so they can compete across whatever part of the cycle is in. And that is paying huge dividends now as we continue to kind of go through cycles. So that's going to be a constant focus and we get ready. We don't try to time the market per se, but we do lean into the market when the opportunities are there and with a portfolio that's ready to go.

On the flip side of that, we continue to look for inorganic opportunities where we can bring an advantage. And as we've talked about many times in the past, where 1 plus 1 equals 3 or more. And that continues to be a focus. It's got to be accretive. It's got to leverage some of the things that we can uniquely bring and it's got to be competitive with our other investment opportunities, and that remains a continued focus across all of our businesses.

The next question comes from Sam Margolin of Wells Fargo.

Maybe taking away from upstream a little bit because everything seems to be directionally consistent and in line there. I wanted to ask about the comment you made in the prepared remarks on the carbon business and the battery contribution, and then it ties into lithium too, the lithium price environment isn't favorable, but there's maybe some synergies or some relationship there with the carbon business. And I don't know, it even ties into lightweight materials and Proxxima and chemicals too. So I guess the question is, what's exactly going on with this battery initiative? It seems like there's a lot of inputs here that could drive an interesting outcome.

Yes. Thank you, Sam. And I think you actually touched on one of the advantages of the work that we're doing and sticking to what I'd call is our hydrogen and carbon molecule business is a lot of the applications that we're developing the new applications that we're developing, leveraging the same capabilities go into the products that we're currently serving with our traditional business. And so there is a synergy that exists between the different elements of the technology that we're developing. But each of them are driven by a focus on the molecule side of the equation.

So on the battery equation, it's really around the recognition that the world is going [ along ] carbon as we clean up products and focus on lowering emissions. Carbon becomes a cheaper and cheaper feedstock, what can we make with carbon, our technology organization, developed a molecule that has properties that really lend themselves to battery applications that result in these types of performance, step changes in performance with batteries. Those are real. We've tested them here internally. We've tested them externally. We're working with OEMs. And there's a lot of optimism around that application. And of course, the challenge then is building the -- at scale the production facilities and to do that in a way that's very cost competitive and can compete with sources of supply all around the world. And we feel really good about the progress we're making there, and we're continuing to advance that. And that goes into battery applications, obviously, lithium obviously goes into battery applications. So there's a synergy there.

But we came at that, again, differently. It wasn't that we wanted to go into the battery business. It was what products are going to be in demand that we think we can bring an advantage to and produce at a low cost of supply and realize a margin. Lithium, I think, continues to hold promise, but there's work to be done around ensuring that we can put a process in place that brings lithium to market at a cost, very competitive with the cash cost of existing producers. And so that's a piece of work that we're doing or demoing that technology to convince ourselves that we can get the cost where we want them so that we will have a robust, resilient business irrespective of where the pricing goes.

And then with Proxxima, it too has -- it's got a lot of applications in terms of rebar that we're making or the coatings that we're using in the shipping business in the piping business, pipeline business, oil and gas business. And we can also use it in injection molding and to make battery holders. And so there's a lot of overlap here, but it's really a function of understanding where those applications can bring the most value, bring a value and use versus the incumbents and then build those businesses up and sell into them. So I think we're going to find that portfolio over time, continues to grow, and we're working with a set of customers that frankly are leveraging each of those products in addition to our existing traditional products.

The next question comes from Jean Ann Salisbury of Bank of America.

ExxonMobil is a leader in carbon capture and storage. There have been conflicting things that I've read and heard about data center interest and using CCS as an offset to emissions. From your standpoint, is this interest real? And do you see this as being a potential material uplift for that segment?

Yes. Thanks, Jean Ann, for the question. I recognize the -- your comment with respect to the ups and downs and conflicting information you may be reading. I think, like a lot of these things that start off with a lot of hype and enthusiasm, it takes time for the market to kind of work through and land on or ground on the realities of the opportunity set out there. And I think as the development of these data centers have progressed and the desire to have low carbon data centers and what opportunities exist. I think people have begun to realize that certainly in the time frame that our people are talking about today, the really only viable option at scale today here in the very near to medium term is gas-fired power generation with carbon capture. And we're uniquely positioned with respect to that with the investment that we made in Denbury and now today have the only scale end-to-end carbon capture and sequestration system. And frankly, the only integrated set of capabilities that can follow the molecule from capture all the way down through the pipe and into the subsurface. And so that unique offering, I think, puts us in a position to have really substantive conversations with some of the hyperscalers. And I would say that today, we are engaged in very serious substantive conversations with a number of the hyperscalers. There is a commitment to finding a competitive way to decarbonize these data centers. We have an offering with respect to a site and location that I think meets those needs, and we're kind of working our way through the commercial construct. And my hope is and expectation is we should see that work manifest itself hopefully by year-end with the project announcement, but I think it's serious right now.

The next question comes from Paul Cheng of Scotiabank.

Darren, I think over the past several years, you guys have done a good job in managing the pace due to, I think, both the asset mix as well as the technology application and all that. So can you tell us that today, what is your [ base on the decline ] for your upstream portfolio we should assume? And also in your manufacturing operation, whether it's refining or chemical, for the cycle, what is the expected [ need the ] downtime or that your available uptime. And from that standpoint, if this is where you are, where you see is the biggest opportunity for the next 5 years to further improve on those?

Yes. Thank you, Paul. What I would say is we're at the very beginning of what I think is the ultimate capture of the potential that we're unlocking with the transformation that we made -- we're making here. And I would say we're very early into bringing the technology or the weight and the power of our technology organization to bear on the areas that you're talking about in terms of depletion rates and how quickly we can offset those and the growth that we're bringing in. If you look at, frankly, the plans that we've got out past 2030, we're continuing to grow production and therefore, offsetting any depletion. And as we continue to do more work, bring technology on, use the supercomputer that we have and the algorithms we have to better understand the movement of the hydrocarbon underground and tap into those things. We're improving the recovery at very low cost. So I think we haven't reached the end of that stream yet. There's still an opportunity there. And so I don't know ultimately where we get to. But I can tell you that the organization is very motivated to continue to use the tools and the capabilities that we're unlocking to change the curve and to change the slope of that curve. And I'd tell you today, I can't give you an answer specifically what that's going to look like because we haven't gotten to the end of that journey.

On the -- our product solutions manufacturing facilities. Again, I would tell you, we just formed the beginning of this year, our global operations organization where we bring together all of our operating organizations to basically work to and erase the standard and basically do what we've been doing in supply chain and projects and technology. We have, prior to that, had set up a global operations organization to support all of the businesses and to bring kind of the best thinking and the best practices on reliability and safety. And even with this centralized organizations, bringing support to the existing operations that were embedded in the businesses, we saw material improvements and the cost of maintenance and improvements in reliability, improvements in safety. And so we demonstrated to ourselves that the power of this collective thinking and taking the best of the best of all is really bringing bottom line value. This next step that we've taken with the operations organization is just going to enhance that and supercharge it. So I think we're going to see reliability and availability and uptime continue to improve across the portfolio, which ultimately brings down our cost, makes us a lower-cost supplier, which allows us to manage through the cycle is even better. And so I think there's -- continues to be a lot of upside with respect to those two areas that you mentioned.

And then I would just broadly say across the whole portfolio, and we're just getting warmed up on some of these centralized organizations, the supply chain organization, what we're doing in procurement, what we're doing in our Business Solutions group. So there's a lot of I'd say, work going on now, and we have a very clear line of sight of how we're going to improve the effectiveness of the organization as well as the efficiency. So I would just say we've got plans out to 2030 that reflect some of that. My view is we're going to improve upon those things as we actually learn more and mature these brand-new organizations.

Darren, do you have a number you can share what is the base decline rate at this point in your upstream portfolio?

No, Paul, I don't have a number for that. Sorry.

Thank you, Paul. And operator, unfortunately, we have time for just one more question.

We have time for one more question. Our final question will be from Biraj Borkhataria of RBC.

I wanted to ask about the Chemicals segment, the Base Chemicals segment. It's obviously been in a tough spot for a while now. Just from your global perspective, are you seeing any signs of green shoots in base chems either on the supply or demand side with your competitors?

Yes. Thanks, Biraj. I think -- so like all of our businesses, there's the tale of two halves. From a demand standpoint, I would say, continue to see very robust strong demand across the world for the chemical products. The challenge with respect to the margins that are out there is obviously from the supply side of the equation. So despite record levels of demand and very good growth in demand, there continues to be a lot of capacity that comes on that expresses the margin. So I think that's -- as you look at the landscape out there, that's a challenge, a good healthy market, good demand for the product, good applications and continue to grow. Our focus has been within that context, again, with the cost efficiencies that we've been capturing with the effectiveness that we've been driving and our focus on high-value products is trying to kind of differentiate ourselves with respect to the marginal supplier that's setting the price out there to get an advantage and to get an improved margin. I think that's been working in our favor in addition to the feed advantages that we've got with the locations that we have. And so our focus continues to be the same: sell into high-value products, continue to drive costs down, be efficient, take advantage of every lever that you've got to pull, lean heavily into the centralized organization to help improve the efficiency of what you're doing and the effectiveness of our supply chain. I think all of those are paying off. It allows us to be more competitive and deliver better results than many of our competitors are able to do in this space today. But the ultimate -- how this resolves itself from a market standpoint, I think hard to judge just based on the competitive dynamics that are out there.

Thanks for your question. Listen, we reached the end of the call. And I want to, I guess, thank all of you for the recognition that you've given, Kathy, and I wouldn't want to end the call without adding to the comments that many of you made. Kathy, I want to thank you for everything you've done for the company. Kathy came in at a very unique time in the company at a level in the company that, frankly, we've never brought somebody in from the outside. And I think, became an instant partner to the rest of the management committee. I have benefited greatly by having her at my side and engaged in discussions over the last 5 years. So it's been a great ride. I appreciate your commitment and hard work that you've made and particularly over the last year, as you struggle to kind of overcome some of your personal challenges, never missed a beat, never compromised on the contributions that you're making to the company. And so you're definitely going to be missed, but we're really looking forward to you accelerating your recovery, wishing you and Ed and your family just a really long, healthy and happy retirement.

I will say that we're happy that one of the first things that Kathy got engaging when she stepped in was to make sure that we had a very robust succession plan and happy to have Neil who we've been training here for several years and now bring back into the mix, I think we're all real confident that Neil is going to do a great job stepping into the big shoes that Kathy has left behind. And fortunately for Neil, they're not high heels. So I think you got an advantage there, Neil so -- but thank you, Kathy. Thanks for everything.

Thanks very much, Darren. Listen, I'm humbled and honored by having the opportunity to have work here at ExxonMobil. And hugely appreciate your support, Darren, the support of the management committee and the board. And hopefully, I leave things in a little better place than when I first came here.

I'm going to miss our people the most. Our people are amazing. And I'm incredibly proud of what they've accomplished over the last 5 years.

And finally, I'd just say I'm thrilled to have Neil Hansen stepping in my place. He has a little bit of experience, 25 years at the company. Most of that actually in the finance organization. So he's just the right person at the right time, and it's really terrific to have such a smooth transition. And he's here with us. I don't know if you want to say a couple of words.

Yes. Thank you, Darren and thank you, Kathy. We wish you the very best. Your positive impact on ExxonMobil will be long-lasting and we are all truly grateful for everything that you've done for us. And personally, I'm very excited to step into the role as CFO and build on really the strong unmatched foundation that we have in place as a company. And I look forward to connecting again with the investment community beginning to catch up with those of you that I already know and then getting to meet those who have not met yet, hopefully, sometime in the near future.

Okay. Thank you, Neil. Thank you, Darren. Thank you, in particular, Kathy. Thanks to all of you for joining today and for your questions. We'll post a transcript of this webcast on the Investors section of our website next week. And that concludes today's call. Have a good weekend.

Good morning, everyone, and welcome to our corporate plan update. Today's call is being recorded. We very much appreciate your interest in ExxonMobil. I'm Jim Chapman, Vice President, Treasurer and Investor Relations. Joining me today are Darren Woods, Chairman and Chief Executive Officer; Kathy Mikells, Senior Vice President and Chief Financial Officer; Neil Chapman, Senior Vice President; and Jack Williams, Senior Vice President. Our full presentation and prerecorded remarks are available on the Investors section of our website, along with a corporate plan news release.

In a moment, Darren will provide brief opening remarks, and then we'll move to our question-and-answer session. During today's presentation, we'll make forward-looking comments. We encourage you to read our cautionary statement on Slide 2. Additional information on the risks and uncertainties that apply to these comments is listed in our most recent SEC filings on our website. We also provide supplemental information in the appendix of our slides. And now I'll turn it over to Darren for opening remarks.

Good morning, and thank you for joining us. We're excited to share how the work we've done to transform ExxonMobil continues to deliver an execution, earnings, market leadership and in value to our shareholders. All of our successes begin and end with our unique set of advantages. We've built them over decades, and they distinguish us from our competitors. Several years ago, when we began our work to transform this company, we did so with one objective to fully unlock these competitive advantages. Today, our transformation is driving industry-leading results. We've the strongest portfolio in our history. We're delivering greater value as our mix improves and our production becomes increasingly advantaged. We are more profitable than we were 5 years ago. We expect that to continue as the advantages we will unlock position us for even greater opportunities in the years ahead.

Last year, we committed to delivering 20/30 by 2030, $20 billion in additional earnings and $30 billion in additional cash flow. Just one year later, we see the opportunity to do even more. Compared to 2024, we now expect to deliver $25 billion in additional earnings and $35 billion in additional cash flow by 2030, on the same constant price and margin basis.

We expect to do it with no increase in capital, while generating a return on capital employed of more than 17%. At the same time, we're increasing our 2030 Upstream production guidance to 5.5 million oil equivalent barrels per day, roughly 30% higher than the next closest IOC.

Of course, our priority is value, not volume. About 65% of our production will come from advantaged assets with lower lifting cost and a lower emissions profile. In Product Solutions, we're continuing to strengthen our portfolio through advantaged project start-ups and high-value product growth. Advantaged projects are positioned to deliver $4 billion of additional earnings growth by 2030 at constant margins with roughly 60% from projects we've already started up. We're also beating our 2030 emissions reduction plans across the portfolio. We've already achieved our plans for reducing GHG and flaring intensity and expect to reach our planned 2030 methane intensity reductions next year.

Let's talk about how we've done all this. It began in 2018 with the first step to unlock ExxonMobil's unique set of competitive advantages by dismantling organizational silos. Every year after that, we've taken further steps to change how and where we work. We moved from 11 independent company silos to 1 globally integrated enterprise. The corporation moved from a holding company to managing all the core capabilities that underpin success in our businesses. It's been a challenging journey, one that will continue in the years ahead. But it's unlocking the true potential of our people and our company's capabilities for the first time in our history.

The transformation has fundamentally changed how our company works, how and where decisions get made, how expertise and capital are deployed, how scale is leveraged and how we capture value across our integrated businesses. It's sharpened our focus on what matters and changed the speed at which we learn and act. Our centralized organization support the entire enterprise, focused on delivering excellence in execution and setting the bar for performance standards across all relevant

Industries, not just ours.

As a result of this change, more than 95% of our above-field workforce have had their roles transformed, expanding their scope and impact. The benefits of these changes are reflected in our earnings and cost leadership.

Through the end of the third quarter, we delivered more than $14 billion in structural cost savings since 2019, more than all other IOCs combined. We expect to achieve $20 billion in structural cost savings by 2030, $2 billion more than we said in last year's plan. Underpinning our streamlined structure is the implementation of a new enterprise-wide process and data redesign that SAP calls the most holistic and transformative in industry. This single solution replaces more than 10 disparate functional ERP systems. It modernizes and simplifies how we operate at every level of the company, redesigning end-to-end processes and connecting: data, transactions and decision-making across every business, geography and function.

It will become an integrated source of global intelligence. It will enable us to learn and act faster and better leverage our scale, accelerate the adoption of artificial intelligence and integrate new solutions. Through this transformation, we're strengthening and, for the first time, fully leveraging our competitive advantages in ways that truly set us apart. It will be extremely difficult, if not impossible for anyone to replicate.

Let me briefly cover each of these. Starting with scale, which underpins everything we do. Scale is vital. It supports investments across the commodity price cycle, particularly when you want to invest countercyclically. It makes the development of proprietary technology affordable by leveraging benefits across a large base of operations, but size alone doesn't create scale. Scale comes from having one way of working, which accelerates learning, improves effectiveness, and drives down cost.

Organizing, channeling and learning from experiences aggregated across disciplines, businesses, geographies and over time, unlocks tremendous capability and value. Malcolm Gladwell's’ book, Outliers, made the point. Mastery requires 10,000 hours of deliberate practice. We do that thousands of times over across a portfolio of operating environments, capital investments, technology developments, logistics and back-office transactions that no one can match. That's the power of scale, compounding expertise, building and enduring advantage. Our global Supply Chain is a great example, managing an immense volume of product movements, with an ExxonMobil vessel docking somewhere in the world every 20 minutes and rail movements involving a fleet of more than 40,000 railcars, comparable to Union Pacific and BNSF.

Our new centralized structure allows us to translate this high volume and the data associated with it into hundreds of thousands of hours of experience and learning that drives bottom line improvement. Our Supply Chain organization is on track to generate more than $5 billion of cost savings per year by 2030. Another good example is project development using modular construction. We took an upstream offshore project design and development approach and have applied it to our entire portfolio of investment opportunities. It's resulting in unique-to-the-world designs, faster construction times and significant cost savings.

By integrating along and across those value chains, we increase our scale and capture unique value where the whole is greater than the sum of the parts. The Permian Crude Venture is a great example of that integration, where we manage the molecules from the wellhead through tanks, pipelines into our refineries and then our chemical plants and on to our customers. We expect it to generate roughly $9 billion in business value through the end of the decade.

Turning to technology. This advantage is at the heart of what we do. Long before today's tech sector, ExxonMobil was discovering, developing and deploying game-changing solutions derived from the foundational elements of our world: carbon and hydrogen molecules. Today, our Global Technology organization unifies those capabilities and applies them to our biggest challenges to deliver differentiated performance. This is creating entirely new products and processes in lowering cost, raising yields, improving efficiency and productivity across all of our businesses. Our Singapore Resid Upgrade Project deployed breakthrough proprietary technologies that convert low-value, bottom-of-the-barrel molecules into some of the highest-value lubricant basestocks we offer.

In the Permian Basin, we're applying patented, lightweight proppant, developed through downstream research and a deep understanding of petroleum coke properties, as a proppant to increase recovery from hydraulic fractures. To date, this new technology is demonstrating up to 20% higher recovery while improving capital efficiency. That's just one of more than 40 stackable technologies we're developing and testing with the objective of doubling resource recovery in the Permian.

We're also developing entirely new opportunities with new high-growth, high-margin products in large established markets. Proxxima transforms low-value gasoline components into a revolutionary resin solution lighter, stronger, faster curing and more corrosion-resistant than alternatives.

In construction, Proxxima-based rebar has demonstrated up to 40% faster installation than steel.

In Coatings, our Proxxima technology enables a one-step marine cargo tank coating solution that cuts application time in half, creating significant savings for our customers.

In automotive, Tier-1 OEMs are showing strong interest in our lightweight battery enclosures made with Proxxima.

And in the oil and gas sector, we're showcasing Proxxima's superior subsea pipe coating attributes in our Hammerhead development.

In carbon materials, our next-generation battery anode graphite is demonstrating 30% faster charging, up to 30% greater available capacity and up to 4x longer battery life. And with our recent acquisition of Superior Graphite assets, we're establishing a differentiated graphtization process with higher throughput, 50% greater energy efficiency, and much shorter processing time than industry alternatives. This is a game changer in energy storage solutions with significant benefits in EV and on-grid battery storage applications.

These are just a few examples from a robust pipeline of breakthrough technology developments. I expect much more to come in the years ahead. The advantage that translates our efforts into bottom-line results is execution excellence. How we achieve our results is as important as the results themselves. Living this philosophy and learning from our collective experiences, has resulted in a deep knowledge of critical disciplines. This advantage manifests itself in all facets of our business, particularly in our execution. This is evident in the most important area and the one most difficult to consistently manage safety.

This year, we expect to deliver our fifth consecutive year of industry-leading personnel safety performance and the fifth year of no significant process safety events. It's also evident in another critical area of our capital-intensive business, project design and execution and the performance of our Global Projects organization. From its inception in 2019, Global Projects have set the standard, improving cost, schedules and delivering best ever safety performance on an increasingly complex portfolio of projects.

Through 2030, global Projects is on track to deliver $10 billion in capital savings and set the benchmark for industry-leading cost and schedule performance. This year, we completed more strategic projects than ever before including some of the largest and most complex projects in the industry's history. These include our fourth deepwater development in Guyana, where our "design one, build many" approach has enabled us to deliver large-scale projects at an industry-leading cost and schedule.

A wholly owned grassroots world-scale cracker complex in China, a large and complex project delivered at industry-leading pace, and nearly 40% cost advantage versus an equivalent U.S. Gulf Coast project. And the Singapore Resid Upgrade Project, introducing proprietary new-to-the-world process technologies, delivering new-to-market products.

On average, we executed about 3x as many mega projects as our nearest competitor with up to 20% lower cost and 20% faster delivery schedules than the industry average. For sustained leadership in a capital-intensive business, our project design and execution advantage is critical. And once a project is built, it needs to operate at industry-leading utilization. That's why we recently announced the formation of a Global Operations organization, combining all of our operating organizations with our centralized operations group.

Since establishing a central group focused on operations, we've deployed new approaches to managing safety and conducting maintenance. These efforts have resulted in sustained industry-leading safety performance, a 2% increase in asset utilization, lower cost and roughly $3 billion of incremental value. With a single organization directly responsible for all our operations, like Global Projects, we'll learn and improve even more quickly.

I look forward to sharing the successes of this new organization far into the future. Behind all of this, our advantages and ongoing transformation is the incredible effort and commitment of our people making it work, embracing the change in the "one team, one goal" mindset. Our people and our culture are core strengths. We develop our people through a diverse set of experiences and related assignments that span organizational boundaries and country borders, providing a variety of challenging opportunities.

Working with seasoned leaders and deep technical experts from around the world, over careers that span decades, provides rich development experiences and leads to a depth and breadth of capabilities others can't match. And importantly, builds a unique culture based on shared values. Our people are proud of what they accomplish but are not prideful. They celebrate our successes, while challenging themselves to achieve even more. They fight hard against failure, but recognize it's a price that is sometimes paid to achieve great things.

And our people are never satisfied with being second best at anything. All of these advantages are critical to delivering our plans to substantially grow both our traditional and new businesses. Our global outlook sees strong demand across our core businesses, with oil and natural gas continuing to supply more than half the world's energy in 2050. The new IEA World Energy Outlook, published last month, offers an even higher projection of future energy demand. This pragmatic shift is encouraging. Hopefully, it will help guide governments toward policies that better balance the world's need to reduce carbon emissions while meeting the critical growing need for reliable and affordable energy.

Meeting these needs and offsetting a growing rate of depletion will require sustained investment. With our advantages, this represents a significant opportunity for even more attractive returns. What continues to stand out on this chart, that I first shared last year, is the value growth in the markets for our new products. Each is built on our core technical capabilities and operational strengths, leveraging the same advantages that have underpinned more than a century of success in our traditional products and markets.

By 2030, we see potential addressable markets for our existing and new businesses totaling $4 trillion. By 2050, that number could more than double to about $8 trillion based on third-party estimates and our own global outlook. Our plan continues to reflect investments to capture the value represented by these markets. However, the mix and pace are changing in line with the evolving market conditions.

As we recently shared, this year's plan reflects the suspension of spending on our Baytown low carbon hydrogen project. While we're convinced that low carbon hydrogen will be required for the world to achieve net zero and that our project is advantaged versus today's alternatives, the markets and customer base are developing slowly.

As a result, we're inventorying our work on this project until the market catches up. Conversely, we expect to reach a final investment decision by the end of next year for our first low-carbon data center. This reflects the progress our carbon capture business has made in negotiations with a number of hyperscalers and power providers.

Going forward, we expect the new market part of our investment portfolio to be dynamic. This is consistent with how we've characterized these investments from the beginning. While in our plan, they are contingent on a demonstrated demand in a realized value proposition. They must deliver accretive returns, competitive in our portfolio or we won't invest. The changes in this year's plan reflect this as will future plans.

In summary, we remain excited by the huge value opportunities that are developing and that we are uniquely positioned to capture. This is reflected in our portfolio of advantaged investments: projects with low cost of supply, high returns and resilience to bottom-of-cycle conditions. To sustain growth in our traditional businesses, while significantly growing our new businesses, we plan to reinvest about 40% of our total cash flow from operations through 2030 as cash CapEx.

We plan to invest $100 billion of major projects that are expected to start up between now and 2030. At constant prices and margins, we expect these projects to generate about $50 billion in cumulative earnings over that time frame. Over the full life of these projects, we expect returns in excess of 40%. That's capital discipline, not investing less, but investing in the right things where our unique advantages generate superior returns. Through 2030, we expect our earnings, cash flow, and return on capital employed will far exceed the results of our competitors and provide a strong foundation for growing shareholder value far beyond what our industry has historically delivered, which is why we introduced this chart last year compared to other IOCs and diversified large-cap industrials, we're delivering leading cash flow growth and doing so with lower relative volatility.

That reflects the strength of our integrated model, our disciplined capital allocation and our focus on execution excellence. Our balance sheet remains one of the strongest in the S&P 500, as reflected by our credit rating and exceptionally low net debt-to-cap ratio. This financial flexibility gives us strength to invest through price cycles and provides a buffer against price volatility. As I've said many times, ExxonMobil is not defined by our products, but by our capabilities.

Evolving society needs and a potential energy transition are not threats. They are tremendous opportunities. In any future, ExxonMobil will have an important role, providing needed solutions and creating substantial shareholder value, which today is not yet reflected in our valuation. This provides a compelling opportunity for long-term investors.

I'll close with this. Our formula for value creation is straightforward: leverage a unique set of competitive advantages that others can't replicate; build a uniquely advantaged portfolio of high-return investments; operate with excellence; and share success with shareholders.

We've always focused on this. Since the pandemic, we've done more of it faster. We set the bar high and cleared it. With this year's plan, we're raising the bar again, and we will clear it again. The transformational journey we've been on is delivering with much more to come. We have a unique set of competitive advantages and a capable, committed workforce that others simply can't match, and we have a plan to deliver strong returns through 2030 and far into the future. We look forward to answering your questions. Thank you.

Thank you, Darren. [Operator Instructions]

And with that, we'll take our first question. It's coming from Bob Brackett with Bernstein.

I would argue that the simple message to take away from today's update is $5 billion of additional 2030 earnings and cash flow. The lion's share of that looks like it's coming from the Permian, say, $3 billion. The uplift in Permian volumes that you've guided to is another 200,000 BOE a day. That's around 75 million barrels BOE a year and at a $40 sort of cash flow margin, which is reasonable given your guides, that's about $3 billion. So it seems like you can get most of the Permian uplift just from volumes, yet you've also highlighted in the written materials, the technology pipeline that you have, plus a goal of increasing per barrel earnings. Can you -- are those the right buckets to think about? And can you sort of break down that Permian cash flow uplift into those buckets?

Yes. Thanks, Bob. Let me just maybe provide a little context and then hand over to Neil to take you through a little bit more detail, but your math is pretty solid. The Permian is a big part of the value uplift that we're seeing plan on plan. We've also got improvements in the base business, and we've also got structural cost improvements that are adding to the bottom line, which is a collective effort across the organization. So those are the key components. I wouldn't I think the volume piece of the equation in the Permian is very much tied to the technology work that we've been doing and something that Neil, I know, is excited to talk about. So I'll hand it over to Neil to kind of take us through some of that.

Yes. I mean, the growth really comes from execution and improvement -- continuous improvement in the plan that we've been talking about for a long time, and that plan is unique in our industry. It's about deploying this capability set that's differentiated from everyone else to the largest contiguous Tier 1 resource base in the industry, both in the Midland and the Delaware. That resource base allows us to deploy capital way more efficiently than others. We can drill longer laterals. You know we drill 4-mile laterals continuously. We're deploying our Global Projects organization to build the facilities cheaper with building one, designing -- design one and build many for the surface equipment. And of course, Darren talked about the technology programs that we're deploying, 40 stackable technologies. We talk a lot about lightweight proppant, and you've seen the improvement.

Last year, I described to the investment community what lightweight proppant does and how it was going to improve resource recovery by 15%. Now we're very confident it's going to be 20%. And we're still very, very early in the deployment. We only got lightweight proppant in 20% of the lateral length that we drilled last year, which is really, really small. So we're on a path to improve recovery. We expect to improve recovery by about 50% by the end of this decade. And while there's always uncertainty, and there's always risk with new technology programs because we have this pipeline of 40 stackable technologies, we're increasingly confident that we'll be able to double the resource recovery in the early 2030s.

The next question comes from Doug Leggate with Wolfe Research.

Darren, it's kind of amazing that it was a year ago, that you laid out a $30 billion cash flow growth story and 1 year into a 6-year plan, you're up 17%. I have to imagine that there is obviously some risking to the target. So my question is, what else can change over the next 5 years. The Permian obviously continues to do great. Guyana, for example, you still have your 1.3 million versus 1.7 million capacity. And I could go on and on, but now there's newswires suggesting you might be reentering Iraq. So I guess my question is, how would you characterize the risking of the $35 billion target? I think you characterized that as you'll beat that hurdle as well. How should we think about that?

Yes. Thanks, Doug, and I appreciate the question. I think the way to think about this, and there are unknowns in this space, but I take you back to the comments that I made in the introductory remarks, which is we set on a journey to unlock the potential of this corporation without fully understanding the limits of the value that we can create in doing that. And what we've been delivering here in the last several years continues to demonstrate that the transformation the corporation is going through is indeed working, and there is trapped value that we are now unlocking and we've seen the beginning of that. The plan year-on-year just is another cut at realizing the opportunities that we're beginning to unlock. So we recently introduced a single technology organization that brought together all the capability across the corporation, and we're seeing great benefits from that, just like we saw when we brought the project organization together.

As I said in the introductory remarks, we've just brought the operations organization together. We will see a lot of benefits from that. We've got the supply chain organization. So we've built these very large common centralized organizations to support all the business. And I would tell you, Doug, we're very early in the journey around capturing the value from those large organizations. If you think about the size of the change and how early we're into it, we've got a long ways to go, and I think a lot more value that we haven't actually recognized.

On top of that, and as we mentioned in the comments, we're building this single enterprise system across the corporation. That is unique in our industry. And when you combine that unique single instance ERP system with the scale and the diversity of our business and all the work that we're doing, there's potential value unlock there that, frankly, is hard for us today to even estimate. But we know that it's there. We see great opportunities there. The stuff we can see more than justifies that investment, but there's going to be a lot more to come from that.

So I think maybe to your point, we do think there's a lot more upside here. And the additional benefit that comes from that is as we get better and demonstrate performance, more people want to work with us. And so the opportunities that we're unlocking in the upstream and working with resource owners because we can deliver faster and at a lower cost. That's a huge benefit to resource owners. They want ExxonMobil involved in that. So it's kind of a self-propelling, self-supporting effort in that as we get better, we get more opportunities. As we get more opportunities, we get better, and we just keep moving through that. So I think we've got a really good formula here. We're on a really good path and feel really positive about the approach. I don't know if you guys have anything to add to that?

Well, let me just say this, Doug, that I think in terms -- we have this really, really strong portfolio already. And I think as we -- the organization is so focused on executing that portfolio, we're seeing continuous upside. You've seen that in the Permian results this year. I mean, it's just one comment because you've raised it many times about the 1.3 million barrels a day and 1.7 million barrels a day of capacity, I will remind you of this. We -- in our plan, the eighth boat, the eighth FPSO starts up at the end of 2030. We don't get any production from that vessel or very limited in that year. So you'll see the production in the following year.

I would just say that in the Product Solutions camp that the Proxxima and carbon materials that Darren mentioned, very little of that is included between now and 2030, about $400 million by 2030. But there's a lot of earnings potential there. We're putting a lot of emphasis on trying to accelerate those opportunities. So I do think there's potential upside there as well, Doug.

Our next question comes from Devin McDermott at Morgan Stanley.

So I wanted to shift over to Product Solutions growth. And if I just kind of step back, I think the ability for Exxon to develop proprietary technology and scale it into commercial business is one of the key differentiators to your value proposition. There's a lot of focus on the Permian and advanced profit opportunity, but there's a lot of potential growth in Product Solutions as well. I think it's underappreciated. You've highlighted some of the new business opportunities and think about over the next 5-plus years, they're a growing wedge of the Product Solutions growth. Jack, based on the comments just now, it sounds like there's $400 million embedded in the 2030 guide, you've highlighted $1 billion of total potential though by 2030 and then $13 billion from these new businesses by 2040.

But I guess my question is, can you just talk about some of the progress in these new business areas, the milestones you're focused on to derisk growth and maybe solidify some of the upside to growth across the key verticals like Proxxima, carbon materials, lithium or anything else you all want to flag?

Yes. Let me -- I'll hand it to Jack in just a minute. I just want to again set some context for that, Devin, because I think it's a very good question and your point about the potential in E&PS is not fully recognized. I would agree with that. But I would also -- we're moving away from talking about chemical facilities and refining facilities and getting much more focused on the fundamental conversion technologies that we have in our facilities and thinking about how we use the facilities themselves, the kit and more importantly, the technology and the technology capability behind that to transform these molecules into solutions that society is going to need and not limit ourselves to the products we're currently making, but think instead what products could we make to tap into needs and high value, high growth in large markets.

That's fundamentally the philosophy and why we moved from a chemical organization to a product solutions organization to reflect the fact that we've got a lot more to offer through these facilities in that work than what we're currently making today. And hence, why I say we're not defined by our products. And the Carbon Materials ventures is a great example, as is Proxxima of looking at where some low-value feedstock is to make high-value products. And so that is just the beginning of the journey that we're on there, and I'll let Jack take you through some more of the specifics.

Yes. If I could just talk about those 2 in particular. First of all, as Darren said, I mean, this is high-grading yield. This is taking low-value products, low-value streams and high-grading those into very valuable products. These are advantaged projects -- products. If you look at Proxxima, it has differentiated performance properties versus its incumbents. The other thing is the -- these are technology-driven and they both have both Proxxima and carbon materials, the battery anode material have big moats, IP moats around them. The other thing is there's no real ceiling on demand. These had really high TAMs. So a lot of opportunity there.

In terms of what we're looking for, Devin, right now in Proxxima, the big thing is we're disrupting supply chains. So we're going in there and that's taking some time as we change our formulations and so forth. And then in Carbon Materials, we really have 2 different technologies, we have this advantage synthetic petroleum coke technology, this advantaged graphite technology. And so we're working on getting both of those -- scaling those both up to where they can -- we can get those up into something that can really move the needle.

And then the one other thing I would add is, as you mentioned, some of our low-carbon materials that we're moving forward with. And so we have seen CCS really start to pick up in terms of customer interest. We now have 9 MTA under contract with 6 customers. We're already flowing CO2 for our first customer. We have 3 more customers that we'll be bringing online next year. You mentioned lithium, which is a technology, again, where we think our core competitive advantages really will come to play. And we're going to be introducing, I'll call it, our first small unit in 2028 to make sure that we take what is great acreage that we have in the snack over area and ensure that we can actually deliver it at a good cost of supply.

The hydrogen market, I would say, is one area that has been more slowly developing than we originally expected. But on the reverse side of that, the CCS market seems to be accelerating. So when we look across our low carbon solutions business, again, that's an area that we really see as great opportunity going forward, not just through 2030, but through 2040 and beyond.

The next question comes from Neil Mehta with Goldman Sachs. Neil, we're having a sound issue there. I want to try one more time.

I just want to spend some time on the share repurchase program. And as part of the guidance, you talked about $20 billion in reasonable conditions in 2026 or flat versus 2025. And just on Slide 19, you show there's a lot of surplus cash after the dividend. So Darren, Kathy, love your perspective on the sustainability of the $20 billion of the share repurchase and if we go lower on oil prices and what's the willingness of taking on a little bit of leverage given how strong the balance sheet is to countercyclically buy stock.

Let me -- I'll let Kathy, this is right up her alley. So I'm sure she would want to talk about this. But just again, a little bit of context what I would tell you with respect to this plan as we do every year, we have a sensitivity where we really test hard what happens in some pretty severe scenarios, more severe than what we saw with COVID, to make sure that the plans that we have and importantly, the projects that we're trying to execute and the growth steps that we're trying to take are resilient to some very extreme price environments.

And so I think the foundational element of the plan is, we think, robust to just about any reasonable price scenario that somebody could throw out there across all of our businesses. And so a lot of confidence in the value levers and executing on those levers through this time horizon. And I'll let Kathy talk to the specifics of share repurchase.

Yes. So let me start with. I actually think we go out of our way to give a little bit more guidance in this area than most of the other companies and our peers provide so that shareholders have an understanding of what our intention is, right? And we always do give you a little bit of a caveat, saying, hey, at the end of the day, it is going to depend on reasonable market conditions. But I think you've seen us see execution, very consistent with the guidance that we have provided. You mentioned in our base case scenario at $65 real Brent 2024 pricing, we throw off $145 billion in surplus cash flow. We also showed you a test at $55 a barrel, right? And in that scenario, we throw off, I'm going to call it, about $100 million in surplus cash flow. And we mentioned, right, we have the strongest balance sheet of all of the IOCs. And so we could always tap into our balance sheet. That would give us call it, an incrementally a bit less than $40 billion.

So I'd say in a wide range of market environments, we will be able to generate surplus cash flow, which is really what helps to support not just rewarding our shareholders, but as you know, our capital allocation philosophy is, first and foremost, we are going to fund advantaged projects, right? Because that is actually what creates the virtual circle that ends up enabling us to reward our shareholders. We clearly really benefit from having a rock-solid balance sheet, and that's something we're going to continue to protect.

I mean we ended the third quarter with a 9.5% net debt to cap, right, better than all of the IOCs. So we look at that and then say we've got to reward our shareholders. You would have seen that we increased our dividend in the third quarter by 4%. We are in a pretty unique category. There's -- we're better than 95% of companies in the S&P in terms of having an annual dividend that has increased for now 43 years running, right? And we've got 40% retail shareholders who we know are counting and very focused on that dividend.

So I'd say we have a very clear approach in terms of capital allocation. I think that approach is working, and we make sure that we test our plans against a wide variety of market environments and that we have a lot of surplus cash flow that we can dedicate first and foremost to the business, but also to rewarding our shareholders.

Yes. And Neil, let me just add. I think one of the things different from the past is we've got this long-term plan out through 2030. Frankly, internally, we look a little even beyond that. So -- and we've got a lot of confidence in terms of what's coming. And so the key variable here is price. And I think one of the philosophies you see playing out in buybacks is consistency. And so when you know what's coming down the pike, and it's a little bit like our capital investment, we know the cycles, we know when things drop, we know they're going to come back up. And so we can take a little longer view around how do we maintain some consistency in this space. And I would tell you that is a theme that we spend time talking about and focused on. You'll recall that when we acquired Pioneer, we bumped that up to bring back in some more shares that we issued as part of the Pioneer transaction.

I'm still very focused on recovering those shares and offsetting any of the dilution that we might have seen with that. And then the question is, what is a good solid base to move forward with again, condition on market environment, but that's the philosophy and how we're thinking about it. Thanks for the question.

Our next question comes from Arun Jayaram with JPMorgan.

Yes, I was wondering if you could elaborate on some of the investment opportunities you're seeing in the data center arena. You highlighted that you have some firm turbine awards and you've highlighted a couple of potential sites. I'd love to hear your thoughts as a potential FID decision later next year -- by late next year.

Let me -- I'll hand that to Neil. That's a business under his portfolio, but I want to reconnect to the approach that we've taken here and I think it sets us apart somewhat uniquely from others in this space is recall that we're tapping into our core capability set and core organizations. And so it allows us to build on the capability that we've been developing in our traditional businesses and just extend it into new markets, utilizing the same capabilities, the same people, the same talent, the same technologies. And so it gives us a lot of flexibility and a lot of optionality, which is what you see happening in our portfolio. We were first to come with a very discrete well-developed project concept around decarbonized data center. And we went out to -- and when that noise first started happening, people first started talking about, we went out very quickly to start talking about the opportunity, how we could bring it to life, and we've made great progress there, and I'll let Neil kind of talk more about that business.

Yes. Arun, we're focused on partnering with a power producer where we can add CCS. We can add decarbonize power. We can decarbonize the power, and that's what the hyperscalers are interested in. Now the way we're doing it is we're leveraging the CO2 infrastructure that we have on the Gulf Coast. That's the largest CO2 infrastructure in the world actually. And the principle of the philosophy here is we'll provide decarbonized gas, net zero gas from the Permian to a power plant to provide decarbonized power, we'll take the emissions and we'll sequester those. And it's all about integrating all those together.

So working with several hyperscalers who are interested in the decarbonized power, we're working with a couple of power producers. We're well, as Darren said, well down the road of developing a project and that's why we're confident that we can FID a project by the end of next year.

Our next question comes from Betty Jiang with Barclays.

I wanted to ask about the major capital projects, but it's -- Proxxima as a product is something that is getting increasingly intriguing because you're seeing application in construction and automotive and now you're in your own boat, FPSO. I'm just wondering where do you see the bottleneck around acceleration of that product. How quickly could that scale? And do you find this as one of the more high-impact businesses among the various emerging businesses that you have in the portfolio?

Jack, do you want to take that?

Yes. Thanks for the question, Betty. Yes, I'm really excited about Proxxima. I agree with you. I think it has tremendous potential. A lot of applications, infrastructure, as you mentioned, in the rebar where it displaces steel, 75% lighter, twice as strong. The coating is a really interesting application where you can save significant time and number of coats for industrial coatings. And then as you mentioned, subsea with a subsea insulation that we're going to use our Hammerhead, but we also had a lot of industry interest there. So the big question is, why can't you go faster? And we're going to be up to 35 Kta of capacity this year. We'll ramp that up to 200 Kta of capacity by 2030, and we're looking at ways to accelerate that. But the big issue is into something like auto, it takes some time and think about going into rebar, we have to set up new manufacturing plants for these facilities.

So it's just taking a little bit of time -- this is very disruptive. It's way higher value in use than current incumbents, but changing formulations is very disruptive. It takes several years. When you get into the 2030s, I think this can ramp up relatively quickly. It will be more kind of exponential and be on that curve kind of in the '29, '30, '31 time period, and I think we can ramp pretty fast. And as I said, it doesn't really have any ceiling here. It's a really high TAM. So we can -- right now, our plans are very methodically going one plan after another, but we can accelerate that if the market demands are there.

Our next question comes from Steve Richardson of Evercore.

I was wondering, this is probably for Neil, but I'd love to go back just to the Permian quickly. Considering how much you've learned since Pioneer and the beefed up update here. I was wondering if you could talk about the tension between recoveries on a per well basis versus on a section or a DSU basis that operators all seem to be taking a bit of a different tact on. And how is your thinking on that changing, if at all? And how much of how you're developing the play has changed over the last year, acknowledging that the lightweight proppant is just one of the many technologies that you're looking to bring to bear here. I was just curious if you could kind of help us on how the thinking around that has changed, if you could.

Neil?

Yes. It's a simple approach. I've talked about this many, many times. The Permian is different. The benches are different the geographies are different. So you have to deploy different technologies, different techniques, different well spacing, different frac intensities depending on what the geology is. And that's what's unique about what we're doing. We're looking very, very closely about what is the geology, what for any bench that you are developing or any cube that you're developing. The key here is to improve the recovery. I mean I think at the core of everything we're doing is how do we get more oil hydrocarbons out of the well. And the philosophy is very, very simple. You've got to fracture the rock more. And when you fracture the rock more, you create more flow for hydrocarbons. When you fracture it, you have to keep those fractures open for longer, that's why the lightweight proppant that you talked about comes in. You have to improve how the molecules flow.

These are very, very small fractures, very, very small channels, maybe the diameter of a grain of sand. Oil is very sticky. So you have to increase the fluidity of the molecules, and that's why we -- in our technology program, we do things like inject surfactants to improve that. But it all depends. The Wolfcamp A is different from the Wolfcamp B. Midland County is different from Martin County. It's about understanding where you can bring the different capabilities and optimizing it for each development that you have. That is the key on all of this. When you have a deeper portfolio of different technologies, you can deploy them in different ways. Now when you improve recovery, you can elect to recover more or you can elect to space the wells out and lower your capital efficiency, get the same recovery at lower capital. The plan that we laid out today, what's really unique about it is we're going for up 200,000 barrels a day versus what we talked about last year, but Bob, that with no increase in capital.

That's 200,000 barrels a day with no increased CapEx. And that all comes from deploying this technology portfolio, this technology pipeline that we have, which is still very new, but tailoring it to the different geologies and the different geographies. That's what we're doing differently. Everyone else seems to be using the same philosophy wherever they're doing the development.

And I think I'd add to that, Steve, the objective function here is maximizing NPV. And so with these differences and as Neil's organization and the technology organization is working with the field, figuring out what is the maximum value proposition and the mix between the capital efficiency and the additional recovery. That's being done and tailored for each one of the developments. So that decision evolves and changes as we move around this differentiated set of assets.

Our next question comes from Jean Ann Salisbury from Bank of America.

You've been very clear that you believe that you have patent protection on the pet coke lightweight proppant. Can you give more color on the proprietary barriers to entry that you see on the many other contributors to increased Permian recovery that you referenced and why you don't expect other operators to replicate a lot of that uplift.

Well, I'd say it's quite simple. We're developing a unique proprietary set of technologies, pet coke is just one of them. And so before deploying it, we created a large intellectual property portfolio to patent protect. That's not typical in this industry, as you know. But on all the technologies we're doing, we're very, very clear that we're using the deep capabilities of this corporation, and we're going to patent protect it. We're not going to share it. We talk about pet coke and lightweight proppant a lot. But I'll just give you another example. I just briefly mentioned in the last question around surfactants and fluids to improve the flowability of molecules. Well, industry will use that. They'll use surfactants. That's not unusual. Those surfactants are readily available from service providers, but we have one of the largest chemical companies, chemical organizations in the world. We're one of the largest solvents intermediates organizations in the world.

So we're tailoring those solvents depending on the development that we are moving into. Those how we're using those solvents in that application is proprietary. So we have creating -- we have created. We are creating a broad intellectual property portfolio. We're patenting it and we're determined to defend those patents.

And Jean, I would just add, that's been one of the challenges we gave -- I gave Neil and the technology organization is we don't want to innovate and develop technologies for the industry. We want to do it to the advantage of ExxonMobil and our shareholders. And that has been an underlying principle from the very beginning that when we have these advantages, we need to make sure those advantages accrue to our bottom line uniquely as we develop that. So it's been an underlying focus as we develop these technologies from day 1, frankly.

And Darren, I'd just say, Jean Ann, most of my career was in the chemical business, developing and deploying new technologies, which we broadly patented, and we're just deploying that same capability into the upstream now.

We unfortunately have time for just one more. And that last question is coming from Alastair Syme with Citi.

Can I just ask about the opportunity set in Canada? I think since the last corporate update, there's been a change in the political narrative. So I wonder what opportunities that might open up for the heavy oil assets and how they would compete with capital versus the other opportunities you've highlighted?

I'll let Neil kind of talk to specifics of Canada. What I would tell you, I mean, one of the good things about our markets, Alastair, is they're global. And so it's really a function of can you get your products competitively at a low cost of supply into the global marketplace. And so I think we're somewhat agnostic as to where they come from, much more focused on, can we develop those with an advantage that brings them on the market that frankly beats the other resources from a cost of supply standpoint. Neil, do you want to talk specifically about Canada?

Yes. Well, I'd say in heavy oil, Alastair, I mean, we've got really 2 big assets, of course, Kearl. When you looked at how we've improved upstream earnings and cash flow, this $5 billion over the period, one of it comes from improving our base business. And a large part of that is from Kearl. We've made tremendous strides in Kearl reducing the cost and increasing the volumes of very little extra capital. Today, we're running close to 300,000 barrels a day in Kearl. So we see opportunity to continuously improve to lower the costs.

Now I would say we are right up there with the leaders, if not the leader in the lowest cost mining operation in Canada today. That's a long way removed from where we were 10 years ago. We're getting up to 300,000 barrels a day consistently. In the in situ business, we're deploying some new technologies. I think we've talked about that before. This is around solvent enhanced recovery. We're relatively early in that development, but we have a tremendous resource base. And we think if that technology proves out to be viable and correct and deliver what we anticipate it will, it will be able to compete for additional capital in our portfolio.

And remember, we're not doing anything in the upstream unless it has a cost of supply less than $35 a barrel. So what we're talking about is heavy oil less than $35 a barrel, which means it will generate a 10% return over the complete life of the project even if the price doesn't go above $35 for the period.

So we feel really good about it. It's part of the portfolio. It's about part of improving the base. And I think this in situ is likely to see towards the back end of this new technologies at the back end of this decade and into the 2030s.

Thank you, Alastair. Thank you, Neil. There's one more thing I'd like to discuss before we end this call. Today, we're announcing that Kathy, our Chief Financial Officer, intends to retire from the company effective February 1 of next year. Some of you may know, but in recent months, Kathy has undergone a series of procedures and surgeries to address the debilitating, but thankfully, non-life-threatening health issue. While her condition has improved, it has become clear to her, and I think the rest of us that she needs to focus fully on her recovery.

Her decision to retire has obviously been a tough one for Kathy and for many of us across the company who care about her. And I will tell you that I will definitely miss having her by my side. During her nearly 5-year tenure, Kathy has strengthened the finance organization and really helped in the development of our talent pipeline and succession plans.

Neil Hansen, the current President of Global Business Solutions, will be elevated to the CFO role, reporting to me and joining the Management Committee. Neil has been with the company for 25 years and has proven his capabilities running large businesses and in most of the critical areas of finance. He's a well-regarded leader who's assembled and run highly successful teams throughout his career. Many of you will, of course, remember Neil, when he was Head of Investor Relations several years ago.

The Board, management committee and the entire corporate leadership team wish Kathy a fast and full recovery. We also, of course, congratulate Neil on his new role. The 2 of them will work together over the next several weeks to ensure a smooth transition within the company and for all of our external stakeholders. Kathy's last earnings call will be when we report our fourth quarter results early next year. And Kathy, I just want to thank you for everything you've done for the company, for all our employees. You will be very missed.

Thanks very much, Darren. It's certainly been a pretty challenging year for me. Things are absolutely getting better, but it has been slow going. And I still have a lot of work to do with my doctors to one day kind of get back to my usual self. I absolutely love ExxonMobil and my colleagues. And I know my colleagues on the call today will recognize the sincerity of my disappointment in needing to leave this great company. I care deeply about our role in society and the people that we serve across the globe.

Sadly, it became clear to me in recent weeks that my love for this company meant I had to step aside and let someone who could focus full time on the CFO role take over. I'm absolutely delighted that, that person is Neil Hansen. It didn't take me long after joining ExxonMobil to realize how talented and how capable he is. He's been groomed for this role for many years, and he's really set himself apart as the right person to succeed me. I am very certain that he's going to continue the good work of the finance leadership team that has begun to really build a world-class organization.

Likewise, I'm very confident that he's going to further strengthen our relationships with our investors and analysts. I'm deeply grateful to you, Darren, to the rest of the management committee, to my leadership team for their support during my illness. And I'm equally thankful for the way that everyone has supported my decision to retire.

ExxonMobil is a company that really has a heart and soul. And I have to tell you that there's been countless moments and encouragement that I've received over the last several months that really prove that to me over and over again. I'll be here, obviously, through the fourth quarter earnings call, and I will then be proudly rooting from the sidelines for ExxonMobil for years and years to come. So with that, I'm going to go ahead and turn it back over to Jim to close things out for today.

Okay. Thank you, Kathy, very much. And thank you, Darren. And thank you all for joining today and for your questions. We'll post a transcript of this webcast on the Investors section of our website by the end of the week. Also, you'll recall last year, we introduced our modeling toolkit, which includes what we view as very helpful information for those creating or updating financial models of our company.

We appreciate all the very positive feedback we received on that last year. Note that we've updated the toolkit this morning to reflect our latest price sensitivities and other key assumptions. And this is all available as usual on the Investor section of our website. Finally, on behalf of all of us at ExxonMobil, we wish everyone a happy holiday season. And that concludes our webcast.

Good morning, everyone. Welcome to ExxonMobil's Third Quarter 2025 Earnings Call. Today's call is being recorded. We appreciate you joining us. I'm Jim Chapman, Vice President, Treasurer and Investor Relations. And I'm joined by Darren Woods, Chairman and Chief Executive Officer; and Kathy Mikells, Senior Vice President and Chief Financial Officer.

This quarter's presentation and prerecorded remarks are available on the Investors section of our website. They are meant to accompany the third quarter earnings press release, which is posted in the same location.

During today's presentation, we'll make forward-looking remarks, including comments on our long-term plans, which are subject to risks and uncertainties. Please read our cautionary statement on Slide 2. You can find more information on the risks and uncertainties that apply to any forward-looking statements in our SEC filings on our website. We also provide supplemental information at the end of our earnings slides, which are also posted on our website.

And now I'll turn it over to Darren for opening remarks.

Good morning, and thanks for joining us. Last December, we reviewed our corporate plan under the theme of a league of our own. The results we've delivered since then continues to support that theme. From the technologies we're deploying to the major projects we're delivering to the structural cost savings we're capturing and the value we're creating, our results are truly in a league of their own. In fact, in the third quarter, we delivered our highest earnings per share compared to other quarters in a similar price environment.

Let's start in Guyana, where we're breaking records with production more than 700,000 barrels per day in the quarter. We brought Yellowtail online four months ahead of schedule. It's our fourth and largest development with production capacity of 250,000 barrels per day. Yellowtail was delivered in nearly the same time as previous FPSOs despite a 70% increase in facility weight from its higher production capacity and improvements in GHG performance. We also sanctioned our seventh development, Hammerhead, which is expected to begin production in 2029. And importantly, we're making a positive and growing local impact. Guyanese now make up over 2/3 of the country's oil and gas workforce, more than 6,000 people with more than 2,000 local businesses engaged.

In the Permian Basin, another advantaged asset, we set yet another production record of nearly 1.7 million oil equivalent barrels per day. We also acquired more than 80,000 net high-quality acres in the Midland Basin from Sinochem Petroleum. The transaction provides control of drilling locations and opportunities to further deploy our technology to drive greater returns. It's another example of bringing our portfolio advantages to an acquisition ensuring that 1 plus 1 equals 3 or more.

In addition, during the quarter, multiple third parties published reports validating the benefits of our lightweight proppant. Last December, we shared how we're using low-cost refinery coke as a proppant that penetrates deeper into fracs. This improves access and flow, which increases well recoveries by up to 20%. Wood Mackenzie reported that our proprietary proppant is delivering significant improvements in resource recovery, supporting our own results. They acknowledge that our upstream integration with refining operations create a strategic advantage that is difficult for others to replicate. And that lightweight proppant is just one of many innovations we're developing to maximize upstream recoveries and grow the value of our unconventional business.

This year, we expect about 1/4 of our wells, we use our new patented proppant and roughly 50% of new wells by the end of 2026. This, along with our cube development, pipeline of new technologies and deep inventory of quality acreage is why our Permian production continues to grow well into the next decade. This is an important point as it clearly differentiates us from our competitors. We're talking about reduced investments, peak production or a shift to harvest mode. And our corporate plan update in December, we'll share more on our Permian success and how it's strengthening the value proposition of our broader portfolio.

New to the world technologies are also playing a critical role, albeit on a slightly longer time frame in our Product Solutions business. We're making solid progress with new products based on our Proxxima systems. This year, we're tripling production capacity. At the same time, we're continuing to demonstrate significant value and use. With our Proxxima-based rebar, we've demonstrated a 40% improvement in installation efficiency compared to steel. We've also introduced a new one code solution for marine cargo tanks that replaces the standard three code process. This cuts coating time in half, speeds up return to service and deliver significant cost savings. These performance gains are helping us penetrate large established markets in key segments where we're building the foundation of a strong pipeline of opportunities.

We've had significant interest in our Proxxima battery enclosures from Tier 1 auto OEM suppliers based on the fast production speed and lightweighting provided by our product. In 2026, we have the opportunity to demonstrate the superior subsea insulation and installation characteristics of our Proxxima products in the oil and gas sector, our own Hammerhead FPSO. And then our rebar and infrastructure opportunities are expected to yield approximately 20,000 tons of cells by 2027. Through our signed MOUs with [indiscernible] Steel, investments in Proxxima based rebar manufacturing facilities will grow over the next two years. This will allow us to scale quickly into these fast-growing markets.

In Singapore, we successfully started up our resid upgrade project and are converting low-value fuel oil into high-value lubricant products in diesel using a proprietary catalyst at scale. Project utilization is currently around 80%, ramping to full capacity by year-end with our new-to-the-world base stock on grade and delivery to customers.

We've also progressed the development of our revolutionary battery anode graphite that can deliver breakthrough improvements in battery performance. Early feedback from leading auto OEMs and battery producers has been promising. Their testing shows that batteries can be charged 30% faster, providing a 30% increase in effective range and last up to 4x longer. This quarter, we also announced the acquisition of key assets from Superior Graphite, a leader in the graphite and specialty carbon market. Working with their team and incorporating their proprietary technology, we will develop and scale a differentiated graphitization process that has higher throughput, 50% more energy efficient and significantly lower cost than available industry alternatives today.

We also commissioned our newest supercomputer, Discovery 6, developed with Hewlett Packard Enterprise and NVIDIA, delivering a step change in exploration and seismic processing. This is the world's 17th most powerful computer. Seismic processing that used to take months now takes just weeks is already having an impact in Guyana, enabling more than $1 billion of potential value capture from increased resource recovery at our first six FPSOs in the Stabroek block.

Our long-standing focus on and investment in technical innovation is paying dividends. When coupled with the capabilities we've developed in execution excellence, we deliver results that others can't match. You've seen it this year with our global projects organization and the 8 key start-ups we've highlighted to date, which includes some of the industry's largest and most complex projects. Our Proxxima systems expansion and Golden Pass LNG project, both remain on track for start-up around year-end, completing the last 2 of our 10 key 2025 startups. Together, these 10 projects establish an important foundation to our 2030 earnings and cash flow growth plans. They're expected to drive more than $3 billion in earnings contributions next year at constant prices and margin.

Before closing, I want to briefly touch on a new tool we introduced in the quarter to make it easier for our retail shareholders to support their company and vote their shares. In September, we introduced a first of its kind free opt-in voting program for our millions of retail shareholders. Typically, only about 1/4 of them, growing almost 40% of the company vote at our annual meetings. We think shareholder participation should be the norm, not the exception.

Our program approved by the U.S. Securities and Exchange Commission, allows participants who choose to opt in to have their shares automatically voted to support management's recommendations. The program is completely optional, and participants can easily change their votes or opt out at any time. Since implementing it, we've been very encouraged by the positive feedback we've received, especially from other companies looking to replicate the program and make it easier for the voices of their retail shareholders to be heard. This is just one more example of the work we are doing to grow shareholder benefits and value.

Stepping back, looking at the quarter and reflecting on the year-to-date results, we feel good about the progress we're making. We're delivering on all the challenging commitments we made consistent with our track record since the pandemic and setting the pace for industry. We're deploying innovative technologies that are delivering new-to-world approaches, processes and products that drive industry unique value. We're transforming how and where we work to improve our effectiveness and deliver structural cost reductions that exceed all of our competition. We're defining the industry benchmark in project execution for schedule and cost on an unmatched number of projects. And most importantly, we're strengthening our competitive advantages and, frankly, all aspects of our business to deliver earnings and cash flow growth now and far into the future. I'm confident we will remain in a league of our own.

With that, we're happy to answer your questions.

Thank you, Darren. Before we move to Q&A, I have a quick announcement to share. Please mark your calendar for our annual corporate plan update, a virtual event this year for Tuesday, December 9 at 9 a.m. Central Time.

With that, we'll move to Q&A. [Operator Instructions] And operator, please open the line for our first question.

[Operator Instructions] The first question comes from Neil Mehta of Goldman Sachs.

I just wanted to pick up on the capital spend point. You are indicating that you're going to be below the range this year. And of course, we'll get a little more color on December 9 about how you're thinking about 2026. But could you talk about the moving pieces? Is it about capturing deflation? Is it about deferring investment particularly around some of the low carbon solutions, how should we be thinking about the drivers of that?

Sure. Neil, thanks for calling in. Yes. maybe I'll take you back to the corporate plan presentation we gave last December when we talked about our CapEx spend. And we broke it down between the base and then some of the things that we are pursuing where we had to develop the markets, how to develop the sales. We're looking at policy coming in place. And we indicated at a time that, that capital would move depending on what we saw in the market and how those markets develop. And that's exactly what we're seeing as we've gone forward in some of these new ventures, particularly low carbon solution portfolio, market is not developing as fast as we had planned for. And so we are pacing the spend in that as consistent with what we talked about.

From my perspective, it's much easier to plan on doing something and then pull back than it is to not plan on something and then try to rush into it. So we feel really good about where we're at with that and continue to watch and we'll continue to pace the market as it develops and as we see the demand for some of those products grow.

The other point I would just make is we provide that range going out in time, and that reflects really the uncertainty around exactly when all the projects in our portfolio get FID-ed or get -- as they progress and when exactly those things happen, are hard to call far into the future, so we give ourselves -- we recognize that variability and make sure that we encompass that in the range that we provide. And so I would expect, as we go forward, you'll see some of that movement, just frankly, because you can't predict exactly when that capital spend will happen as you're executing a project. But we feel good about where we're at. We feel good about where that underrun is coming from.

I'd also say we're getting a really good productivity on the capital we're spending in the Permian as well which is a benefit.

And then all I would add to that is, obviously, we had an acquisition, actually a couple of acquisitions this quarter, in total, $2.4 billion. So when we gave that guidance that we expect to be a bit below the low end of the $27 billion to $29 billion cash CapEx, that's excluding those M&A transactions. And we obviously don't plan for those transactions. So that's why we excluded them.

The next question is from Devin McDermott of Morgan Stanley.

So I wanted to dive into the Permian a bit more. It's record production results in the quarter. You also raised the guide for the full year. I was hoping you could unpack the drivers for us a little bit more. Are we already seeing some outperformance as a result of your advanced proppant rollout. Have there been other changes you've made to development or spacing? And how does this all impact how you're thinking about the capital and activity requirements to achieve your multiyear growth targets?

Yes. Thanks, Devin. And I would say if you look at what we're doing in the Permian and the innovation that's occurring with that organization. It is hard to predict the improvements when you're planning ahead of time. But what the team is constantly doing is looking for how they can improve in evaluating what they've been doing and then making changes on the fly. We've been testing a whole pipeline of potential technology options that will unlock resource, lower our capital cost. And we're seeing improvements across the range of those technologies as we implement them. So we feel really good about the productivity of what we're seeing in the Permian. I feel really good about what the team is looking at to grow the production.

And when we talk to you in December with the plan, you'll see that we -- every year, we're looking to kind of build that improvement into the planned outlook. So it's hard to -- it's not any one single thing. It is a function of a lot of hard work by the team, a lot of innovation and the technology organization continuing to bring good ideas into the field that is resulting in better production, more effective capital deployment.

The next question is from Arun Jayaram of JPMorgan.

I had a little bit of a bigger picture question. Exxon recently published its global outlook through 2050 and includes around 5% oil growth, 20% gas growth in a doubling of LNG demand called over the next 25 years. I was wondering if you could talk about how this outlook informs your strategy? And how should we think about where the puck will go in terms of future organic or inorganic opportunities for the company?

Yes. Thanks for the question, Arun. It is -- with respect to the first part of your question, the global outlook is the foundation, which we think about our strategy and then build our plans. Obviously, it's difficult to predict with precision how things are going to move, particularly in the short term. But longer term, we focus on the fundamentals where the economic growth is happening to what level is happening, how technology is developing, what policies are being put in place and then try to synthesize all that into an outlook and have been doing that well for as long as I can remember in this company.

It doesn't change a whole lot year-to-year, but it is -- does form the foundation of how we think about things. You may recall back during the pandemic when people were extrapolating from a very unusual market condition we remain focused on what our long-term outlook was telling us and continue to make investments when a lot of other people have pulled back during that time. And that has proven to be the right approach as time moved on. And so we think about it in those terms and the growth in LNG is what underpins our continued interest in finding low-cost advantaged LNG production, the recognition of economy is growing and people's livelihood is improving and the energy demand required to facilitate that underpins continued growth in oil and gas. And so we continue to look for cost advantaged oil production as well.

I think people often forget that there is a depletion rate here. And so if you aren't continuing to invest and find new resources that your supply will rapidly decline, particularly given the role that unconventional production now plays in the global supply. That depletes a lot quicker. Therefore, the depletion curve is a lot steeper. Therefore, the industry has to bring more barrels on to just stand still. And so all of that kind of goes into our thinking in terms of what's needed from an investment standpoint and really keeps our focus on the medium to long term rather than the very short term.

The next question is from Doug Leggate of Wolfe Research.

Darren, I listened to you talk about in a class of your own and I think about all the growth you've had in free cash flow and the reduction in the dividend breakeven. But yet your dividend growth rate remains quite pedestrian. And frankly, I think that's probably holding back market recognition of value. So I wonder if you can address that. At what point do you think the free cash flow expansion translates to a more competitive, let's say, versus the broader market dividend growth rate?

Yes. I'm happy to take that question, Doug. We look at our overall dividend growth rate, and we constantly think about sustainability right? We think about competitiveness, we think about growth. And when we measure it on those three pretty important qualitative factors, we feel pretty happy with where we've ended up. And interestingly, I would tell you, as we speak to investors, we tend to get positive commentary about our dividend growth rate, about our overall approach to dividend growth and about our overall approach to not just dividend growth, but obviously to a more consistent program with regard to share buybacks as well. So we look at the dividend growth rate over a long period of time. We look at it both relative to IOC competitors. We look at it relative to general S&P. We look at it relative to industrials. And when we measure it against those criteria, I would say we come up with an answer that says, we feel like we're in a pretty good place. And generally speaking, we get positive commentary from investors on our approach with regard to our dividend growth rate.

Yes. And I would add to that, Doug, that we're very mindful of the commitment we have on our dividend and the context in which that commitment will play out over the years and as you move through commodity cycles. And so we think it pays to be confident with what we're doing and thinking through where the cycles are going. We all know the prices are going to go up, and we know they're going to go down and making sure that we build a business that can reliably deliver across any price environment is a critical part of how we think about the things that we do in the company.

And the last thing I'd say is we now have 43 consecutive years of annual dividend growth. That puts us in a category of less than 5% of S&P 500 companies, I'd say that's a track record we're quite proud of.

The next question is from Bob Brackett of Bernstein Research.

I'd like to talk a bit about superior graphic graphite. I'm curious what exactly you acquired from them? Was it that their facilities in the U.S. and Europe for more technology? And also curious how tightly integrated would that be into your existing refining petrochemical strategy? And then I'll tack on, what do you think that total addressable market might be?

Yes. Thank you, Bob. Appreciate the question. We talked about now for some time, the work we've been doing from a technology standpoint, leveraging our capabilities to manipulate and transform molecules to make products that the world needs into address gaps and grow value. One of those that piece of work was around what can we do with carbon molecules, particularly given the drive, the necessary drive to reduce emissions and the CO2 out of the atmosphere, that leads to more and more carbon.

So we saw a trend of a cheap feedstock that's growing and what can we make out of it. And so our technologists have come up with a unique carbon molecule that we see the opportunity to graphitize and then put into batteries as anodes.

As I said in my comments, the work that we've done with our pilot plants have led to or demonstrated significant really step change improvements in lithium-ion batteries, 30% faster charging, 30% more range and then extends the battery life cycle by 4x the current technology. So we see it as a huge opportunity. The TAM on that could be up to $40 billion, so that's, in our mind, a market worth going after.

One of the challenges beyond designing the molecule is the graphitization process. And if you look at what the industry norm is in that space, it is a very, very old technology that dates back to the 1800s and takes close to a month, frankly, to develop the product. We said we've got to bring that into current times. And so we're looking for a technology that really leveraged our process technology capabilities and superior graphite had a technology in some assets that, working with them, we could adapt to this. And we think fundamentally revolutionizes making this material for the battery market.

And so that's the approach, we purchased the key assets, have the right technology rights to those assets, and we'll be working with the folks to convert that technology and grow it at scale so we can begin to produce and material at a much higher rate, at a much lower cost and really, really importantly, outcompete the Chinese. This market is dominated by the Chinese. And so we're very cognizant of anything that we do here for the long run, it has to be on the very low end of the cost of supply curve. This technology is going to help us achieve that.

The next question is from Sam Margolin of Wells Fargo.

So yes, I wanted to ask about the inorganic strategy a little bit. It seems like it's accommodated kind of by two factors. The first is capital efficiency in the business. And the second is the balance sheet, which is leading among peers. And so the question is, given all these tailwinds in the business and in the capital structure, do you feel like you can step up in organic activity even more now and set the table for additional opportunities beyond what's in your pipeline today?

Yes. Thanks, Sam. Well, what I'll tell you, if you go back in time when we first started talking about our strategy, it was very much focused on our core competitive advantages and strengthening those advantages and growing them. And that in my mind, not only allowed us to improve and drive profitability in our base business, but it opened up the opportunity for inorganic transactions that took -- where we could take advantage of those core competencies, leverage them in an acquisition and bring more value than either company could do on its own. And that's kind of the foundation of the 1 plus 1 equals 3, which we've been talking about for quite some time.

I think the Pioneer acquisition is a great example of that, where we brought in a very good organization, very good people, very good assets, combine them with our good people, our assets and technology. And together, we're doing more than either company could have before.

That drive in our efforts to find those opportunities do not ebb and flow with the commodity price cycle. It is a constant for us. And I made that point in the second quarter. I make it here in the third quarter. We are -- as we develop these and grow our technology capabilities, our project capabilities, really all the advantages that we bring to the business, how can we leverage those to grow more value organically and inorganically. And it's just a function of continuing to look for and find those opportunities.

So it's a constant, I'd say, focus of ours, and it's really a question of what are the opportunities that present themselves. And that will happen over time. I don't -- we don't have a specific plan for when things show up, but it's this constant effort, which I think any good company with the advantages that we have would be very focused on that.

And just the thing I would add to that. We look at a lot of things, a lot of things, as you would expect us to. We transact on very few things because they have to meet our criteria. As we said, 1 plus 1 has to equal more than 3, right? We've got to bring advantages to the table, scale, integration on rival technology things that are going to create synergies that are going to allow transactions to really generate strong returns. And I think Pioneer is a great example of that. So you should expect that we would look at a lot of things. But we transact on very few, and it's the ones where we have a high degree of confidence that we can earn very good returns.

Yes. I think bottom line on that is we buy value, not volume. I think that differentiates us from many in the industry. And so if we can't see the path to very high returns on transactions, we won't pursue them.

The next question is from Paul Cheng of Scotiabank.

Darren and Kathy, I'm just curious that, I mean, you just have a one-off cost maybe head count reduction. But I'm trying to understand that you've been doing a lot of different projects. I mean, you're probably doing far more than any of your peers at this point. So should we assume that at this moment, you were pretty rounding up against your organizational capability [indiscernible] you think your ability that to even increasing the pace of investment just a function of opportunity set, but not limited by your capability?

Yes. Thank you, Paul. Just to your point about the reductions that you referenced, that was really the next step and a continuum of work we've been pursuing for some time now. We've worked really hard at transforming the how of what we do and that has led to a much improved effectiveness, and it's also led to the efficiencies that we've been racking up. If you look since 2019, when we started this work on the strategy, implementing the strategy, we're over $14 billion of structural cost reductions. That's, on average, about $2.5 billion of cost reductions, structural cost reductions every year. My expectation is we'll see something similar to that this year. And frankly, going forward, we continue to see additional opportunities to become more effective and through that, then get more efficient.

The ability in terms of the capability we've got now is limited by the opportunity set because of the high criteria that we put on it and the insistence that the projects that we bring in are advantaged versus industry on the low end of the cost of supply curve. So it's resilient and delivers robust returns across every part of the commodity cycle. That criteria set tends to narrow the pipeline down pretty quickly as we're looking at things. So to date, we haven't hit that limit.

But I would also tell you the -- as we continue to learn sharpening our pencils, the opportunity set that we see across our technology organizations, our project organization, we think there's still untapped opportunity sets to get even better in that space. So we're not at a limit yet. And frankly, I don't see a limit. Maybe one day, we'll get there, but when you combine the high hurdle you have to clear in order to get into the portfolio, with the existing capability set that we've got, I feel pretty good about the ability to execute.

And I would point to what we did this year as probably the best example of that. The 10 projects we've been talking about, the 8 of them that we've delivered to date. If you look in total, the gross capital associated with those 10 projects is on the order of $50 billion. I don't think there's a company in our industry at any point in history that has successfully delivered that many projects in the time frame that we're doing. And so I think that's just a great example of what we're capable of. And like I said, we've got a lot of ideas in the hopper in terms of how we can improve the technical aspects of what we're doing along with the execution aspects.

That's great. I suppose that that's why you just bought Discovery 6, that's part of that improving your maybe capability and efficiency going forward?

Absolutely. I mean that's, I think I said, the 17th most powerful computer in the world. And if you look at the data that we have to process, if you look at the opportunity set we have, it's allowing us to do things in weeks that used to take us months and months. So it just speeds that cycle up.

And I think if you just look at what we're doing and driving efficiencies, right, it is unmatched across the industry. I mean you look at just what we put up this quarter, $14.3 billion now in structural cost savings compared to 2019. Our track record in this regard, I think, is bar none, and we see more opportunity there.

The next question is from Biraj Borkhataria with RBC.

I wanted to ask about Mozambique and the onshore development. There were some reports suggesting you were targeting FID in the first quarter of 2026, but then I read there was a meeting with the government, which has been deferred. So could you just talk about where you are with that project, maybe the security situation and then whether an FID in early '26 is likely?

Yes, sure. We -- I would say where we're at with Mozambique right now is in a very good place. We've got a very strong relationships with the government there. We've got a really good project concept, working our way through that the security situation there has improved dramatically. I think Total just lifted their force majeure. We're looking at and are in the process of trying to do the same. And so I would say that project is now moving ahead, and we feel really good about that. And as does the government of Guyana, and we're working very closely with Total on that. So I think it's in a really good place.

I think the press reports that you're reading, I would just say, you can't read everything that you believe or infer anything that you take from that just this week, we had the President and his team here on the campus and took them through what we're doing here and showed them some of our capabilities, and it was a really productive session, I think, both of us got a lot out of.

The next question is from Ryan Todd of Piper Sandler.

Maybe one on exploration. You've been, I think, increasingly active on this front in recent years. Can you talk about opportunities on the horizon over the next 12 to 24 months? And how, if at all, you believe your approach to exploration may have changed relative to maybe times in the past?

Yes, sure. Maybe just put exploration in the context. I think when we talk about what we're trying to do in the upstream and grow production in the context of the depletion rate that we see, it is a huge challenge. And so we've been very focused on what we see as the three key levers of filling the hole created by depletion and at the same time, growing that, which is for the things that you have, you got to squeeze more juice out of it. And so a lot of work we've been doing around for the fields and the resources that we're currently developing, how do we get more effective at producing more resources from those fields. And that's driven a lot by the projects organization, our technology organization and the hard work of our operations teams.

You've got to grow your advantages so that you can take it -- you can buy things and take advantage of the inorganic opportunities that we just talked about. And so one of the reasons why, as Kathy said, we're constantly looking at a lot of opportunities, we recognize -- if we can take our advantages and create unique value through inorganic opportunity, that's really important, and it helps us again fill this challenge of the depletion curve.

And then the final point is you've got to find new things that you can develop. And so that's always been a part of the equation for addressing the challenges of the upstream. What we've been very, very focused on is really narrowing what we're doing in the exploration to make sure that things that we're looking for and going after have the opportunity to be material, be commercially attractive, compete in our portfolios. So we focus that. I think we've put a lot of effort in how we interpret the seismic and what we can do there. And so we feel pretty good about the opportunity set that we've got. We really feel pretty good about the technology that we're going to bring into that space. But I would also tell you that it starts with getting the opportunity to go look at things we still got to demonstrate and translate that into results and success in terms of finding things.

We'll take our next question from Betty Jiang with Barclays.

Darren. So Google just recently signed a power contract with gas power plant and wind capture. So really great to see development on that front. Wondering how your conversation is evolving. And I know Exxon has consistently talked about your only interested in power from a molecule perspective. But just given how quickly that power demand is growing and just how quickly that scale is growing as well. Curious if there's any appetite to start offering maybe traditional power first and then adding on carbon capture capabilities later on?

Yes. Thank you, Betty. And it is an area that where there's a lot of interest and activity, and we're very, very engaged with most of the hyperscalers on the opportunity set. But as you pointed out, we're very focused on the carbon capture side, the carbon abated power side of the equation. The fact that power is growing and there's a lot of opportunities there. It doesn't translate into a value proposition unless you can bring a unique advantage to that space. And frankly, that's not the business that we're in. And so it is very much around providing decarbonized natural gas to power stations and then capturing the carbon and the emissions on the back end of that so that we can offer low carbon data centers where more than 90% of the emissions are captured and abated. So that's the value proposition that we're pursuing. There's a lot of interest in that space, and we are also working with independent power producers to work with them to provide the electron side of the equation, while we provide the molecule side of the equation.

I think we got out ahead of this, frankly, as things -- as this started to break, we secured locations, we've got the existing infrastructure. We certainly have the know-how in terms of -- and the technology in terms of capturing, transporting and storing it. So we're in a pretty good place right now. We're pretty advanced in the conversations. I'm hopeful that many of these hyperscalers are sincere when they talk about the desire to decarbonize have low emission facilities because certainly in the near to medium term, we're probably the only realistic game in town to accomplish that. I think we can do it pretty effectively, and we can partner with these folks to continue that, to grow that, frankly, over time.

So that's where we stand. I'm optimistic at this point, but we're early in the game and we'll see kind of what gets translated into actual contracts and then into construction.

The next question is from Jean Ann Salisbury with Bank of America.

I wanted to go back to the proppant. As you referenced in your prepared remarks, the first like 12- to 18-month well results have started to come out, the Wood Mac study and the results have been really positive. As you've been able to get more data this year, is there any other granularity you can share on where you think you're able to improve recovery the most like, for example, gasier zones, oiler zones, deeper zones, et cetera? And is there anything you can comment on how you see the strength of your patents or other barriers to entry, keeping others from copying it?

Sure. I think to come back to the proppant itself, remember, what we're doing here is as you get the fracs finding ways to get proppant deeper penetration into those cracks. So it's really a function of, I'd say, the rock and the properties of the rock and the ability to flow the material that has made this a successful as it is.

I would also tell you that we're continuing to optimize and fine-tune that. So I don't know that we're at the -- we're certainly not at the end of the learning curve with that. And so I hope to see continued improvements in that space.

I would also tell you that it is just one of a number of technologies that we are pursuing along that whole production process to try to improve recoveries, lower our capital. And the pipeline is pretty promising. And we're going to hopefully give you a perspective on that in December when we talk about the plan going forward.

But I would think about the lightweight proppant as just one of a number of levers that we're pursuing. We feel good about what we see there. We think there's additional potential. But I would also say that we see other technologies that will work in conjunction with those and be additive with respect to recovery.

You remember, I challenged our technology organization to double recovery. And at the time we did that, we didn't have a path or a line of sight to how we would do it. But we just recognize given how early we were in the technology cycle, there should be opportunities there and our job was to go find them. I would say today that we've got a pipeline and certainly a line of sight to how we might do that. We've got a number of things we've got to make work and a number of technologies that have to prove themselves but we've come from kind of a white sheet of paper to one that's now filled out with a lot of ideas that we're pursuing. So I would say we're well on the way to making some of that a reality.

And with respect to protecting it, we feel pretty good about the patent. We feel pretty good about the supply of the raw materials that the patent covers. And everything that we're pursuing in this space, we're very focused on protecting because we do feel the technology is proprietary and the benefits of the technology, therefore, should be proprietary to ExxonMobil.

The next question is from Jason Gabelman of TD Cowen.

I want to go back to the exploration discussion because it was notable since we last spoke, you've entered into multiple new blocks to expand exploration. And it's not only Exxon pursuing additional exploration efforts, but you're seeing peers advertise their kind of exploration intentions also. So the question is really what do you think is driving this industry trend? And do you see competition to enter into new blocks becoming more competitive? And I'm thinking, given Exxon's view that [ Shell is going to ], I guess, in the next 5 to 10 years. Is that a decent part of why you've seen kind of the industry focus more on exploration?

Yes, sure. So I think going all the way back, I can remember talking in this forum in 2020 when the industry had sharply pulled back, and we were somewhat in isolation with continuing our investment program, making the point in the case that with the depletion curve, the industry has to continue to think long term, invest and find resources. That, I think you're now seeing play out. The unconventional that you mentioned obviously filled a hole in the short term.

But like all resources, there's a finite life particularly when you don't have the technology portfolio that we do, where we can advance and grow the recoveries. And so unlike many of our competitors in the unconventional space, where they see maybe production plateauing or even declining. We continue to see an opportunity to grow production with the technologies that I've been referencing.

So I think as an industry as a whole, I think people see that resource and the horizon of it. And so -- are shifting now to the longer-term, longer-cycle projects out there. From my perspective, we've never taken our eye off of that, continue to work it. It's always been a very competitive space. And frankly, from my perspective, the way you succeed in a very competitive environment is to bring unique capabilities and advantage. And so it keeps coming back to the things that we've been working on. Resource owners want to see cost-efficient development. They want to see developments that happen quickly. They are on schedule, don't have overruns and so that they can start accruing the benefits of that resource development quickly. Guyana is a great example of that. So our work has been on improving our abilities to bring a unique set of skills, technology, projects, capabilities so that we can develop resources more cost effectively which resource owners ultimately pay for. So they like that and to bring it on quicker so that they can benefit from the resource development in a sooner time frame.

So all those things play to our strengths. I think that gives us a competitive advantage. I think importantly too, they know that we have been steadfast in our focus in this space. We don't blow with the wins. We don't come in and out of this. And so they know when we commit to something that we're going to deliver on that. So those things, I think, give us a bit of an edge and advantage in the discussions. And I think you see that manifesting itself in some of the announcements that we've made with some of the opportunities that we're pursuing.

The next question is from Paul Sankey of Sankey Research.

You've referenced a lot of this already on this call, but I wondered if you could give ExxonMobil's perspective on the current AI CapEx boom, especially as you're bringing down your CapEx guidance today. And it's sort of a process and strategy question, a high level. Your CapEx, your peak CapEx spending at Exxon around 2013 was over $30 billion a year, which would be about $40 billion in today's dollars. If we look at Meta alone, they've got a trailing run rate of your peak $30 billion and are going to $70 billion this year and next. Could you talk about the challenges that you envisage for that kind of capital deployment from a management perspective, firstly?

And secondly, I wondered given the speed of this, what are the impacts directly on your business? What are the areas where this boom is either challenging or benefiting you?

Yes, sure, Paul. I can't say I can speak with much insight on what some of the hyperscalers are doing or Meta is doing with their capital. I will just say generically that it is very difficult to effectively and efficiently swing capitals from one level to another level that's materially different.

So I mean, our approach is to have long-term plans, as you know, to basically meticulously developed plans with rigor and then execute those with excellence. And that's how we think about it. The lower guidance that you heard that we've talked about today is not a function of a change in activity set. We're still pursuing the same opportunity, the same businesses. It is very consistent with what we talked about last year, which is there are things that we've built in the plan that has more uncertainty than our base business, these new things that we're developing new businesses. Data centers are one of them, low carbon solutions are another, the carbon material ventures, Proxxima, all these things where you're going into new markets that are at the very early stages of their growth is there's a lot of uncertainty as to when those things actually materialize into concrete opportunities. And we talked about that last year.

And what you see happening is as that market evolves and those materials, those opportunities begin to materialize and the schedule gets clearer and clearer, we're shifting our capital in line with that to make sure that when we do make the investments, we generate the returns that we expect of ourselves that are advantaged versus the rest of industry. And so I would really just caution everyone to take the changes in the CapEx that you're hearing today is a reflection of, in my mind, what we refer to as disciplined capital spending, which is not cutting CapEx, but spinning it in a wise way.

With respect to the AI piece of it, we certainly see the business opportunity there with the low carbon data centers. And as I said earlier, there is a lot of interest in what we could bring to this space, particularly in the near term. And so we're continuing to pursue that. My gut tells me that those opportunities will materialize and they'll become a part of our portfolio. And we'll leverage the Denbury acquisition that we made some time ago to really help accelerate decarbonization of data centers.

And then within our own four walls here with our centralized technology organization, which has IT and artificial intelligence and the whole technology set around digital is part of that integrated technology organization. We see huge opportunities with AI. And in fact, we're deploying that today. We're deploying it downhole and the work that we're doing in the Permian, we're deploying it in our operating sites around the world. Anything where we've got a lot of data, we're using AI to help make sure that we're learning as much as we can from that data and optimizing our production. And so we see a lot of value coming from that today and a lot more value coming in the future.

I will say we're taking maybe a slightly different approach than many of our -- many of the folks I see out there, which is we've stepped back and said, what moves the needle, where do we want to focus this effort. So it is not a scatter-shot approach here. It is a very focused and material movement in the areas that will make a big difference to the corporation, and we're making great progress in that space.

We have time for one more question. Our final question will be from Phillip Jungwirth of BMO.

Refining margins have been pretty supportive this year and were a contributor to sequential earnings growth in the quarter. A lot of moving pieces here at the moment. I was just hoping you could touch on how you see the market considering OPEC unwinds, supply disruptions, resilient demand. And then also touch on the Baytown project FID-ed this quarter and just how you're positioning the business based on the longer-term outlook.

Sure. So I guess the first context to set with respect to this is the demand for petroleum products. And while ultimately that backs up into crude, I think it's really important to point out that there are two supply-demand balances at play here. One is on the crude side, which is the feed that goes into the refinery, and then there's the other on the product side. And those are two separate supply/demand balances that have an impact on refining margins.

And so what we've seen here of late is a looser crude market, and therefore, the feed side of the equation has been looser and prices have come down, so you've got cheaper feedstock. And then on the product side of the equation, we've seen capacity coming offline and supply disruptions around the world, and that is tightening the product side of the equation, the supply-demand balance. And so we see prices going up. And so that has benefited the refining industry as a whole.

And so for those companies that have refineries that are up and running reliably, they've added significantly to the bottom line. And frankly, for the work that we've been doing in our company, the third quarter, we saw the highest reliability that we've ever had. So the work that we've done with the centralized global operations organization is really paying off. Not only are we driving down, significantly driving down our maintenance costs. At the same time, we're driving our portfolio reliability to very high levels.

On top of that, as you know, we've been very focused on really making sure that we're high-grading our refinery footprint and putting our efforts and investments in the sites that have diversified product offerings that have advantaged conversion and that have low cost so that they will be resilient to a number of potential supply-demand environment. So as a result of that, we have much, much fewer refineries today that are much, much more effective at converting crude to the products that society needs. And so we've really upgraded the footprint of the refinery.

And then the last point, which you touched on is within those refineries that we say are strategic and have an advantage in the base case, how do we continue to grow that advantage. And it really is a function of high-grading the molecules in the refineries. We're taking the low-value products that come out of a barrel of crude and putting in the conversion capacity to make those high-value products.

The most recent and significant example of that is what we did in Singapore with our CRISP project where we took the lowest value product residue and fuel oil make and converted that to some of our highest-value products with a brand new to the world, a lubricant base stocks and additional diesel. And so a great example of a proprietary new the world process to make higher-value products, in fact, new-to-the-world products with respect to one of our base stocks. And so a great example of what we're trying to do there.

The Baytown project is a continued step in that direction, which is find a way to high grade the molecule and the conversion that you have in the refinery. And we've got really good opportunities with that asset. We're pursuing them aggressively and they come with very good returns and very resilient returns.

Phil, Thank you, and thanks, everybody, for joining this call and for all the questions. We will post the transcript of this call to the Investors section of our website early next week, and we look forward to connecting on December 9 for our corporate plan update, and have a good weekend.