The Rabid Capitalist

Professor Glenn A. Okun

ExxonMobil (XOM): XOM provided an impressive revision to its strategic plan. Since 2019, XOM has increased its earnings capability, adding about $10 billion to its annual earnings and cash flow at a real Brent price of $60 per barrel. Management said that it can grow annual earnings and cash flow by $14 billion from year-end 2023 through 2027, due to its cost reduction program and improved product mix. The company also announced it will generate $6 billion in additional structural cost reductions by year-end 2027 (for a total structural cost savings of approximately $15 billion compared to 2019). Exploration and development generated earnings are projected to more than double by 2027 versus 2019, resulting from investments in high-return, low-cost-of-supply projects. The company projected that it will generate 30% returns on annual capital expenditures of $22 to $27 billion through 2027. The company will complete $17.5 billion in share repurchases in 2023.

N.B.: This is a very encouraging forecast from XOM. It should be noted that it does not include the benefits of the Pioneer acquisition which will represent additional potential share price gains.