Exxon expects a significant increase in profits as a result of cost cuts, and will increase stock buybacks after the Pioneer deal closes

Darren Woods, Chairman and CEO of ExxonMobil,

Brendan McDiarmid | Reuters

Exxon Mobil Corp. said Wednesday it expects its profits to more than double through 2027 from 2019 as the energy giant moves forward with a series of cost-cutting measures.

Exxon said it is on track to increase its profits and cash flow by $14 billion over the next four years, as the company cuts costs, increases production and increases sales of chemicals, low-emission fuels and high-performance lubricants.

The oil giant plans to reduce structural costs by another $6 billion until the end of 2027, providing total savings of $15 billion compared to 2019.

The announcement comes nearly two months after Exxon agreed to buy Pioneer Natural Resources for nearly $60 billion, or $235 per share. This is the largest deal concluded by Exxon since it bought Mobil in the late 1990s. Pioneer is the largest producer in the Midland Basin, which is part of the Permian.

After the merger is completed – which is expected to take place in the first half of 2024 – the oil giant plans to increase its annual share buyback program to $20 billion in 2024 through 2025, up from $17.5 billion in 2023.

Exxon expects capital expenditures to range from $23 billion to $25 billion in 2024, and $22 billion to $27 billion annually from 2025 to 2027. These expenditures should generate average returns of 30%, with payback periods of more than 90% of spending is less than a decade old, according to the company.

“We are committed to providing energy and products that raise living standards around the world while building new businesses to reduce emissions in parts of the economy that are difficult to decarbonize,” CEO Darren Woods said in a statement. “ExxonMobil is uniquely equipped to do both, and we are confident that both provide significant opportunities for profitable growth.”

The oil giant expects oil and gas production to reach about 3.8 million barrels of oil equivalent per day in 2024, then rising to 4.2 million barrels per day by 2027, driven by growth in the Permian and Guyana Basin.

Exxon is also working to increase its investments in carbon emissions reduction projects to $20 billion through 2027, up from $17 billion previously. The company plans to reduce its greenhouse gas emissions by up to 50% by 2030. The oil giant said it has already achieved half of this planned reduction.

The company focuses on carbon capture and lithium for electric vehicle batteries, hydrogen and biofuels. Its investments in these spaces are expected to achieve returns of up to 15%, according to the company.

Exxon is drilling for lithium in Arkansas and expects to produce lithium used in batteries for electric cars by 2027. The goal is to provide enough of the metal to support the manufacturing of 1 million electric cars by 2030.

Exxon Mobil shares suffered in 2023, falling more than 9%. The bulk of those losses came during the fourth quarter. The stock fell 14% during that period.