Following ExxonMobil’s Q3 earnings release;
Steven Ho, Oil & Gas Analyst at GlobalData, a leading data and analytics company, offers his view:
“ExxonMobil is very confident that it could potentially outperform its peers if the company is able to optimize its assets - preparing to capture a bigger market share once oil demand recovers closer to pre-pandemic levels by year 2022, as forecast by the IEA. The company is focused on the short-to-medium-term outlook with no indication of shifting away from oil. In any case, ExxonMobil could also sustain and profit marginally at lower price environment, given its aggressive measure to reduce operating cost by approximately 20% from 2019.
“Indeed, the company is betting big on the future mismatch of supply and demand of oil, due to underinvestment and project delays across the whole value chain of the sector caused by COVID-19 economic crisis. In this context, ExxonMobil’s narrative is fully aligned on preparing to take on the role of providing for future hydrocarbons demand, in contrast to European counterparts that clearly state their goals in pivoting towards low carbon cleaner energy.
"Despite a lower guidance for capital spending in 2021 down to approximately $16-19bn, ExxonMobil remains focused to invest in high-value investment such as Guyana and Brazil, while pacing the development of Permian and Mozambique LNG. The company also believes that there is a significant upside in downstream and chemicals segment as the current profit margin is at the bottom of the cycle. Furthermore, ExxonMobil is leveraging on its operational scale by integrating downstream and chemical segment to further improve margin.
“Additionally, ExxonMobil is planning to further high grade its asset portfolio by expanding the current divestment program which could return up to approximately $35 billion. However, the company recognizes the competitive market in asset sale currently and modestly pursuing this opportunity.”
4,000 of the world’s largest companies, including over 70% of FTSE 100 and 60% of Fortune 100 companies, make more timely and better business decisions thanks to GlobalData’s unique data, expert analysis and innovative solutions, all in one platform. GlobalData’s mission is to help our clients decode the future to be more successful and innovative across a range of industries, including the healthcare, consumer, retail, financial, technology and professional services sectors.