Exxon Mobil Corporation

Investor Relations, and I'm joined by Darren Woods, Chairman and Chief Executive Officer. Kathy Michaels, our Senior Vice President and CFO, is not on the call today as she's recovering from a planned medical procedure. We wish her a speedy recovery. This quarter's presentation and pre-recorded remarks are available on the Investor section of our website. They're meant to accompany the second quarter earnings press release, which is posted in the same location. During today's presentation, we'll make forward-looking comments, including discussions of our long-term plans, which are subject to risks and uncertainties. Please read our cautionary statement on slide two. You can find more information on the risks and uncertainties that apply to any forward-looking statements in our SEC filings on our website. Note that we also provided supplemental information at the end of our earnings slides, which are also posted on the website. And now I'll turn it over to Darren for opening remarks.

Good morning, and thank you for joining us. This quarter, once again, proved the value of our strategy and our competitive advantages. They continue to deliver for our shareholders, no matter the market conditions or geopolitical developments. We built our strategy to take maximum advantage of ExxonMobil's uniquely diversified business across multiple markets and products. Products that exist today and new products that are groundbreaking technology will enable for the future. In our upstream business, we achieved the highest second quarter production since the merger of Exxon and Mobil more than 25 years ago. But it's not just about the volume. We're growing production from assets that deliver the most value. More than half of our oil and natural gas production comes from high-return, advantaged assets. We expect that number to climb to more than 60% by the end of the decade. One of our most important advantaged assets is Guyana, where we recently marked the 10-year anniversary of our first oil discovery. With nearly 11 billion barrels of resource, it's industry's biggest oil discovery in the past 15 years. We have three major developments online producing roughly 650,000 gross barrels per day in total, considerably above our investment basis. Our fourth development and the largest to date, Yellowtail, is next in line and anticipated to achieve first oil next week, delivered four months ahead of schedule and under budget. By 2030, we expect to have total production capacity of 1.7 million oil equivalent barrels per day from eight developments. The success of these projects has established Guyana as the world's fastest growing economy. It's also one of the reasons I believe the Guyana development will prove to be one of the most successful deepwater developments of all time. Regarding the recent arbitration decision, I admit the ruling was a surprise. We were highly confident in our position and so was CNOOC. This dispute was about protecting our contractual rights. The sanctity of contracts among governments, investors, and co-venturers is critical for the upstream industry. Without it, confidence in the large capital investments is undermined. Having co-written the contract with Shell, we understood its intent and believed the contractual language conveyed it. Unfortunately, the tribunal interpreted it differently. While disappointed, we respect the process and the ruling. As we move forward, I hope our investors take comfort in the length we will go to in protecting the value our employees create for the company and our shareholders. With respect to the continuing development of Guyana, the arbitrator's decision changes nothing for us, and we welcome Chevron to the Statebrook block. Moving to the Permian Basin, during the quarter, we produced roughly 1.6 million oil equivalent barrels per day, which was another record for us. Nowhere is our emphasis on technology and innovation paying off more clearly and immediately than in the Permian, where we have the largest inventory of Tier 1 acreage. Last year, we increased the total resource from 16 to 18 billion oil equivalent barrels with the successful development of new technologies. Our team is making great progress on my challenge to double recovery from the industry average of roughly 7%. We continue to make progress on the deployment of lightweight propent, a patented material made at very low cost with petroleum coke from our refineries. It is proving to be more effective at keeping fractures open, allowing us to extract more oil and gas from each well. On a 10,000 lateral foot equivalent basis, we've deployed this in over 100 Permian wells and are seeing improved recoveries up to 20%. That's up five percentage points from what we announced last December. By year-end, we expect deployments to reach roughly 150 more wells. We're also leveraging our advantage of contiguous acreage to drill four-mile laterals without losing any productivity. Others are drilling wells half that length at far greater cost, resulting in much lower capital efficiency. So, while some operators in the Permian are talking about peak production, our current plans grow Permian production from about 1.6 million oil equivalent barrels to 2.3 million by 2030. And with a deep portfolio of technologies we're developing, we have the industry unique opportunity to drive capital efficient, high return growth well beyond that. Turning to our product solutions project startups, we're continuing to ramp up operations at the China Chemical Complex. This facility supplies China's growing domestic market, the largest in the world, with high-value, consumer-oriented chemical products used in household appliances, hygiene products, and safe food packaging. We're also starting up our Singapore Resid upgrade project, deploying new-to-the-world technology that converts the lowest-value molecules at the bottom of the barrel into some of the highest-value products we offer. With this new technology, we've introduced a new lubricant base stock, which we've sold out, and have essentially sold out the incremental 20,000 barrels per day of production. We've started up our Folly Hydrofiner project in the UK, converting high sulfur gas oil exports to domestic ultra-low sulfur diesel cells. And we're now producing renewable diesel at Strathcona in Canada for the first time. This is a key part of our lower emissions fuel strategy, growing production where policy and economics are supportive of cost-effectively reducing the carbon intensity of essential products. Lastly, we expanded operations at our new Proxima Systems blending facility in Texas, a critical step to more than tripling production capacity this year. We also signed an MOU with a leading building materials and construction company based in the Middle East to manufacture and distribute rebar made with Proxima. These are important steps in establishing this new business. In total, our 2025 project startups are expected to drive more than $3 billion of earnings in 2026 at constant prices and margin. This goes a long way towards de-risking our plans to achieve 2030 by 2030. That's $20 billion of additional earnings and $30 billion of cash flow versus 2024 on a constant price and margin basis. In our low-carbon solutions business, our first third-party carbon capture and storage project is now in operation. The project uses our CO2 transport and storage network, the world's only large-scale system, to store up to 2 million metric tons of CO2 per year that otherwise would have been emitted to the atmosphere. We also recently announced our seventh CCS customer contract. This brings total third-party CO2 offtake to nearly 10 million metric tons per year. In addition, the U.S. Environmental Protection Agency issued the draft Class 6 permit for our Rose CO2 storage facility in Texas. We expect Rose to be the first of many storage sites linked to our CO2 transport pipeline. Turning to the status of our Baytown hydrogen plant, the world's largest low-carbon hydrogen project, we've seen mixed progress. As we've said, this is a complicated project that requires simultaneous development of supply, demand, and policy. We were disappointed that under the recently approved 45-E tax credit, timing for startup of construction was shortened from 2033 to the beginning of 2028. While our project can meet this timeline, we're concerned about the development of a broader market, which is critical to transition from government incentives. If we can't see an eventual path to a market-driven business, we won't move forward with the project. We're now working to determine if the combination of 45Q and a shortened 45V will provide the support needed to catalyze a broader low-carbon hydrogen market. Beyond that, we're working to translate heads of agreements into firm sales contracts, including exports of ammonia to Asia and Europe and domestic hydrogen sales. We knew that helping to establish a brand-new product and a brand-new market, initially driven by government policy, would not be easy or advance in a straight line. It's why we focused on low carbon opportunities aligned with our existing capabilities and advantages. Our strategy provides optionality and flexibility, which is critically important in this dynamic and often uncertain world. I'm pleased to see that it's working. We're strengthening and extending advantages our competitors can't match. With a focused portfolio of advantaged assets operated to the highest standards, world-class execution of large-scale, high-return projects, captured cost savings that exceed all other IOCs combined since 2019, and driving superior earnings and cash flow growth potential, irrespective of the market environment or geopolitical uncertainty. It's why we believe, and more importantly, are demonstrating that we are in a league of our own. Thank you, and we're happy to answer your questions.

All right. Thank you, Darren. Before we move to Q&A, I want to highlight that we will be publishing our annual Global Outlook later this month. That, as usual, contains our latest views on global energy demand and supply through 2050, which forms the basis of our 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.