…CEO boasts of high-quality, high-return investments
By Gary Eleazar
Bank of America has named ExxonMobil as its number one investment pick next year, since the company is expected to see its share price skyrocket by as much as 50 per cent, in large part as a result of its activities in Guyana’s Stabroek Block.
Exxon Mobil had last year announced an ambitious plan to double its earnings and operating cash flow by 2025.
At the time, Chairman and Chief Executive Officer (CEO) Darren Woods, said the oil major’s projections were the strongest it’s been in 20 years.
Reports have since suggested that the company is targeting $10B in profits from its Guyana operations alone, in the next five years.
This is being made possible with the coming on-stream of the Liza 1 (Destiny) later this month and the Liza 2 (Unity) in 2022, with 2025 set for the Payara Field to come on-stream.
Bank of America on Monday named the Texas-based US oil Major ExxonMobil as its top pick among major US oil companies, and said that it believes the oil giant’s shares could surge almost 50 per cent, to $100 in the year ahead.
Exxon’s stock has in recent years been under-performing when juxtaposed against its closest rival Chevron and the market as a whole by a wide margin in recent years.
According to Woods however, “We’ve got the best portfolio of high-quality, high-return investment opportunities that we’ve seen in two decades.”
Responding to the announcement by Bank of America, Woods said, “our plan takes full advantage of the company’s unique strengths and financial capabilities, using innovation, technology, and integration to drive long-term shareholder value and industry-leading returns.”
The plan, according to Woods, includes heavy investments in shale oil, deepwater, and liquefied natural gas projects that Exxon said would increase its production by 25 per cent to 5 million oil-equivalent barrels per day.
Bank of America, as such, said ExxonMobil’s spending is beginning to bear fruit as projects come on line.
Bank of America’s analyst Doug Leggate, said ExxonMobil’s growth investments place it in a stronger competitive and financial position than its rivals, many of which have pulled back on spending, as oil prices have remained low in recent years.
“We continue to believe a strategy of investing counter to the broader industry investment cycle is reloading growth opportunities at advantaged costs and unlike most peers, creates capacity for ratable dividend growth,” Leggate said.
ExxonMobil stocks earlier this year—during the third quarter—saw its share prices plummet on the world market, to the point where it has begun offering shares at lower rates with higher returns, while banking on Guyana to bring in about 20 per cent of its annual crude production in the near future.
According to market reports, the company’s stock at the time was being offered at a nine-year low, while a dividend yield of 5.2 per cent—the highest offer in two decades—was being promised.
The company has been unable, in recent years, to substantially increase its production.
Output fell from 4.2 million barrels per day in 2012 to 4.0 million barrels per day in 2014 and has remained on a plateau since.
The company is, as such, placing considerable importance on its discovery of more than six billion barrels in the Stabroek block off the Guyana coast.
While other companies have drilled about 40 dry holes in the area, Exxon boasts an 87 per cent exploration success rate.
ExxonMobil has almost doubled its estimated reserves in the area since early 2018, from 3.2 to 6.0 billion barrels.
The oil giant is now poised to produce at least 750,000 barrels per day in Guyana by 2025, which is almost 20 per cent of the current output, according to company disclosures.
The company as a result projected a resumption of positive growth its total output next year, for the first time in more than a decade.
ExxonMobil at the time said it expects to grow its earnings per share by 135 per cent, from $3.59 in 2017 to $8.44 in 2025, assuming an average oil price of $60 in 2025.
Earnings growth is expected to be much higher if the oil price exceeds $60 in 2025.
The company will be taking the first three lifts of crude oil from Guyana’s Stabroek Block when production commences this month from the Liza Destiny, Floating, Production, Storage and Offloading Vessel.
The parties involved however are still to conclude a Crude Lifting Agreement (CLA) articulates the terms and conditions under which ExxonMobil and its partners—Hess, CNOOC-NEXEN, and the Government of Guyana will collect each entitlement of crude.
According to, Energy Director, Dr. Mark Bynoe, the agreement not only sets up the schedule for crude cargo lifts based on volume entitlements, but also lays out the strict procedures for efficient crude lifting.
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