Today, ExxonMobil held an employee forum at its campus in Houston. Chairman and CEO Darren Woods discussed the current state of the industry, how the company managed through a difficult period, the leadership role the company intends to play in the energy transition, and his optimism for the future. Mr. Woods’ comments to ExxonMobil’s employees are summarized as follows:
I'd like to start by simply thanking you. You’ve shown tremendous resilience and professionalism over the past few years as we've dealt with the pandemic. These times have been truly unprecedented for the world, for our industry, and for our company.
Beyond the pandemic, we've faced global concerns about climate change and tremendous turbulence in politics and society around the world. Today, I hope to convey to you why I'm so excited about the future. We can't forget that with unprecedented times comes unprecedented opportunity.
Business conditions are improving as the pandemic's impact continues to subside. Global economies are rebounding as vaccination rates rise and infection rates fall. People are returning to work. Personal and business travel is resuming.
The rebound is stressing supplies of oil, gas and chemical products around the world. As a result, prices and margins are rising, improving revenue that we're using to strengthen our balance sheet, fund our capital program and pay the dividend. While the past two years were tough, they laid the groundwork for today's market and helped accelerate improvements in our businesses. Today, we're seeing the benefits of investments we made at the bottom of the commodity cycle, when many of our competitors pulled back.
Meeting society’s needs
Our focus, which I’ve been proud to be part of since joining ExxonMobil almost three decades ago, takes advantage of our company’s history, experience and capabilities. It is based on a noble, worthy contribution which we are uniquely suited for, and that is helping advance growth in global prosperity through innovative solutions that meet society’s greatest needs.
Objectives of our strategy
To accomplish this mission, we've set three high-level objectives:
- Reliably supply the world with products essential for modern living;
- Grow earnings and cash flow faster than our competition; and
- Lead industry in helping fulfill society's ambition for a lower carbon future.
Three strategic priorities
To meet these objectives, we focused on three key priorities:
- Fully leveraging our corporate competitive advantages;
- Delivering industry-leading financial and operating performance; and
- Leading industry in hard-to-decarbonize emissions reductions.
Evolving our operating model
A first step was better organizing our businesses to improve visibility and accountability across value chains in order to improve decision making, speed, and end-to-end ownership of results.
This led to the consolidation of our functional companies and created value chains: Upstream was organized along resource types; Chemicals along global product lines; Downstream along tributary fuels markets and integrated lubricants basestocks with finished products. Now, with the addition of the Low Carbon Solutions unit, we have three fundamental business groups — one to discover, develop and produce hydrocarbons; one to convert them into needed products; and one to manage emissions.
We're in a much stronger position now to realize the benefits of the economic recovery, capitalize on market improvements, and capture future opportunities. We're also better positioned to apply our corporate competitive advantages and the outstanding talents of our people.
Reliably supplying the world
Our businesses continue to lead the way in supplying the world with the products essential for modern living.
Our Upstream business continues to improve the portfolio and is on track for the best cash flow performance in the industry by 2025. We've had outstanding success with discoveries in Guyana and increased the total estimated recoverable resource on the Stabroek block to approximately 10 billion oil-equivalent barrels.
Our Downstream business is steadily improving with a slow return to pre-Covid markets. Our past efforts to increase efficiency are now helping improve our margins as the industry rebounds. We continue to lead the industry with the lowest GHG intensity and are increasing investments in low-emission fuels.
And our Chemicals business is on pace for record earnings this year after contributing $2.3 billion in the second quarter alone. Our strategy to focus on performance products and lead in each product category continues to pay off.
We are delivering excellent progress and performance in each of our businesses, and we are stronger today than ever.
Improving financial position – Growing earnings and cash flow
At our Investor Day earlier this year, we provided a roadmap for improved earnings and cash flow to 2025. Our plan called for improved margins, operating expenses, and other factors that could position us to significantly rebound and regain industry-leading financial performance.
Through the end of the second-quarter, our earnings and cash flow improvements were well on track. We'll report our third-quarter results next week, and, as indicated in our Sept. 30 8-K filing, we expect the market improvement to impact those results. We're in good shape to meet our 2021 plans, which also keeps us on the path to achieving the goals we laid out at Investor Day.
Leading in a lower carbon future
We seek to be a leader when it comes to helping society achieve its lower-carbon ambitions. We started laying groundwork for this in 2017. We built up our R&D capabilities and expanded external collaborations on technology solutions.
We plan to succeed in this area by applying our technology, partnering with stakeholders across the world to scale and operationalize Low Carbon Solutions projects, and advocating for market-based policies that support a lower-carbon world.
We are making tremendous progress. The Houston carbon capture and storage (CCS) hub announced in April has gained widespread support. Eleven companies are now coming together to advance large-scale CCS technology in the Houston area, which is one of the most concentrated sources of CO2 in the U.S. These companies account for more than 70% of the emissions in that region, so it's a very important grouping of interested parties that could make a significant difference in that region.
We're making solid progress with our European CCS projects, and we're seeing real opportunities for new CCS projects in Asia, which we expect to announce in the near future.
Advocating for effective policies
While we prefer policymakers adopt a transparent, economy-wide price on carbon in the form of a carbon tax, we recognize it is politically challenged. However, we are seeing growing, positive interest for specific sectoral policies to reduce emissions and make CCS more economic including carbon-intensity based standards for transportation fuels and the power sector.
Beyond CCS, we've been a leader in advocating for comprehensive federal methane regulations, and we are pleased that policymakers are increasingly making this a key part of their emission-reduction plans.
The next 135 years
Over our 135-year history, we’ve always demonstrated a way to evolve and adapt to meet the needs of society, and I've never been more excited about our opportunity to lead and grow. We have the core technology capabilities to discover, produce, convert and manage hydrocarbons and hydrocarbon-based solutions.
We’ve never been more prepared to deliver the products and solutions that society needs for modern living, in addition to supporting the desire for a lower-carbon future.
I'm proud of the work that all of you have done to overcome the challenges of the past few years.
We still have work to do, though we have turned the corner and are on the right track to regain industry-leading performance. As we have done so many times before, we’ve found our path to leadership and created the opportunity for ExxonMobil to thrive for the next 135 years.