ExxonMobil Seeks Minimum 30% Returns on New Projects

(Bloomberg) -- Exxon Mobil Corp. outlined a target to achieve returns of least 30% on new projects after reducing capital spending plans as it tries to restore confidence among investors.

Exxon’s projects in Guyana and the Permian Basin will generate 10% returns at an oil price of $35 a barrel or less, the company said in a statement Wednesday, ahead of its annual investor day presentation. The plans will increase earnings, cash flow, and “grow its dividend,” Exxon said.

Chief Executive Officer Darren Woods is seeking to reposition Exxon in the minds of investors this week both in terms of its financial performance and its role in the energy transition. During a torrid 2020 in which the stock plunged 41%, Woods reduced headcount, costs and long-term capital spending through 2025 in a bid to boost near-term returns.

As criticism over its environmental record increased, the company also announced new emissions targets, increased climate disclosure and added three new directors, including activist hedge fund manager Jeff Ubben.

Buoyed by a rally in oil prices to over $60 a barrel, Exxon’s shares have increased more than 36% this year and Woods has pledged to defend the company’s $15 billion-a-year dividend even at crude prices lower than today’s.

Still, Exxon has a lot of work still to do to regain its reputation as one of Wall Street’s most reliable cash cows. The company has burned through more than $24 billion of cash in the past three years as low oil prices hit at a time when Exxon was in the middle of a high-spend investment plan. The oil giant now has to deal with record debt of nearly $70 billion, nearly double the level at the end of 2018.

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