ExxonMobil Holdings Corporation

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 pre-recorded 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 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. Good morning, and thank you for joining us.

In the third quarter, conflict in the Middle East continued to create uncertainty across the region and beyond, disrupting trade flows and constraining supplies of crude, diesel, gasoline, and other finished products critical to economies around the world. This lack of supply led to short markets and higher market prices. We recognize the impact high prices have on people's lives and economic growth. We always have. Which is why we have been constantly focused on efficiently growing, advantaged production to keep markets supplied. That focus and commitment pays off in times like this. Over the past decade, we've invested more than $200 billion. We've stayed focused on the fundamentals of demand and developing competitively advantaged projects that grow supply across the commodity cycle. That discipline has helped us build a bigger, stronger business that outperforms our competitors. Our manufacturing complex in Beaumont, Texas is a good example of that. In 2023, we completed a $2 billion expansion that added the equivalent of a medium-sized refinery. That investment paid for itself in about three years and is playing a critical role in meeting today's demand. That is just one of the many decisions we've made over the years that are helping address current market challenges, particularly in refining. We are the largest non-state-owned refiner in the world. Every day, we run about 3.6 million barrels of crude through our refineries and sell about 5.7 million barrels of gasoline, diesel, and other finished products into markets around the world. With products in short supply, our teams have done everything they can to keep prices down by maximizing production. Year to date, we have produced industry-leading volumes of diesel, roughly 1.1 million barrels per day. Global utilization of our fuels manufacturing facilities, excluding Middle East impacts, is at its highest level on record. That helped put more products into the market when they were needed most. We're continuing to make investments to help meet future demand. Our U.S. Gulf Coast asset reconfiguration projects are expected to increase distillate yield by about 100,000 barrels per day, with the first phase already underway at Baytown. We have additional phases planned across our U.S. manufacturing sites to increase yields of diesel, lubricants, and chemical feedstocks. Our global outlook projects that global energy demand will continue to grow through 2050, with oil and natural gas supplying more than half of the world's energy. Meeting that demand, reliably, will require continued investment across the industry, including in the Middle East. The value of our investments is increasing with the organizational changes we've made. This quarter, our global supply chain and trading teams moved quickly as markets shifted, securing feedstocks, redirecting molecules, and moving products where they were needed most. Since 2019, energy products' unit earnings per barrel on a constant price and margin basis are up threefold. We're seeing the benefits of our investments in upstream as well. Excluding Middle East impacts, production volumes are up year over year, supported by continued growth in the Permian and Guyana. In Guyana, production from the Staybrook block surpassed 1 billion barrels of oil just 11 years after discovery. No other major offshore development has reached that milestone as quickly. The closest took roughly three years longer. We expect our fifth development, Uaru, to start up in the fourth quarter. In LNG, we're continuing to strengthen our portfolio. Cumulative LNG production in PNG has now surpassed 100 million tons, with plans on track to further grow PNG production with the Papua LNG project, where we agreed to increase our working interest and assume operatorship. In Mozambique, we reached an agreement with ENI that will increase our operated interest in Rovuma LNG to 50% and exit our non-operated acreage position. Together, these developments represent a significant step forward in building an advantaged LNG portfolio. We're also continuing to build our low-carbon solutions business. We received approval for the Rose Carbon Storage Project and began carbon capture and storage operations for Nucor, our third CCS startup for a third-party customer and second this year. Technology continues to drive performance across the business. In the Permian, we're the only operator currently using automated drilling rigs. We have three in operation today. In addition to significantly improving safety, they are delivering some of the strongest drilling performance in our fleet. We expect to expand their use to about 25% of our Permian fleet next year and approximately half by 2028, helping us continue to grow U.S. production safely and at a lower cost. Structural cost savings since 2019 are $16.9 billion, well on our way to $20 billion of cumulative savings by 2030. Our stronger earnings power was reflected in $15.4 billion of gap earnings and $25.7 billion of cash flow from operations this quarter. That financial strength gives us the capacity to keep investing in advantaged opportunities while returning cash to shareholders. This quarter, we invested $7 billion in the business and returned $9.4 billion to shareholders through dividends and share repurchases. Today, we announced a 4% increase in our dividend per share, marking our 44th consecutive year of annual dividend per share growth. We also announced plans to maintain share repurchases at $20 billion in 2027, assuming reasonable market conditions. Reflecting our confidence in the strength of the business and our strategy to consistently grow shareholder distributions across commodity cycles. Finally, I'd like to recognize a positive development in Europe. As you all know, I've been very critical of European policymakers and their ill-informed attempts to reduce emissions with impractical regulations that suffocate their economy and weaken the continent's energy security. They've done a lot of damage that their citizens will be paying for far into the future. The EU methane regulation was the most recent example. We support the objective of reducing methane emissions, and we've backed that support with action. Since 2016, we've reduced methane intensity by more than 60%, and recently received gold standard recognition from the UN's Oil and Gas Methane Partnership. The problem with the methane regulation is the unachievable schedule. The EU passed a law and set a compliance date without putting in place the regulations needed to implement it. The result was an unworkable compliance problem for industry. We made clear that ExxonMobil would comply with the law, and without a workable path to do so, we would stop importing into Europe. Fortunately, last week, the European Parliament voted to delay implementation by three years, giving the global industry time to implement systems to comply, once the steps required to comply are defined. We are encouraged by this decision and hope it is a sign of things to come. The message is simple. Sound policy must work in practice. It should reduce emissions without sacrificing affordability, reliability, or energy security. It also shouldn't seek to penalize companies that are meeting the critical needs of their people. Stepping back, the third quarter reinforced the strength of our strategy and the value of choices we've made over many years. And we're not done. We'll continue to invest and strengthen the business, helping meet society's need for reliable, affordable energy and products while growing earnings, cash flow, and long-term value for shareholders. Thank you.

Thank you, Darren. Before we kick off Q&A, just one housekeeping item to note. Unlike the approach of the last several years, we do not plan to host a formal corporate plan update event in December. Instead, following approval of this year's plan by our board of directors, we will reaffirm key 2027 planning metrics through a press release later this quarter, and we expect to provide additional color during our fourth quarter earnings call in late January. We continue to be enthusiastic about our outlook and our execution against the long term plans we have previously communicated. So with that, we can move to Q&A. Throughout Q&A, references made to earnings may be related to adjusted earnings. And 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.