Full Title: ExxonMobil: Permian Leader or Just Another Fracker?
Author(s): Clark Williams-Derry, Tom Sanzillo
Publisher(s): Institute for Energy Economics and Financial Analysis
Publication Date: June 7, 2021
Full Text: Download Resource
Description (excerpt):
ExxonMobil has suffered through a disappointing decade. Since 2010, the company’s profits have faltered, its free cash flow has regularly failed to cover payments to investors, and its stock price has fallen by more than 10 percent—even as the Standard & Poor’s 500–stock index almost quadrupled. Central to ExxonMobil’s woes was a string of disappointments in the company’s previously world–class global upstream portfolio, culminating in write–downs of Canadian oil sands projects, multibillion–dollar impairments of U.S. natural gas assets, and failed ventures in Russia.
The company has now placed the Permian Basin, the largest oil–producing region in the United States, at the center of its upstream turnaround plans. ExxonMobil has made a series of high–profile Permian acquisitions in recent years, relying on high–tech horizontal drilling and hydraulic fracturing (fracking) to boost oil and gas output from the region. Despite bumpy progress and shifting targets over the last few years, the company continues to tout its technical and financial excellence in the Permian, recently projecting that it will roughly double its Permian production by 2025.
ExxonMobil has invited investors to examine the quality of the company’s Permian oil wells as a way of assessing the company’s prospects for a financial and operational comeback. In two recent investor presentations, the company highlighted the performance of its wells within the Delaware Basin, a subregion of the Permian straddling western Texas and southeastern New Mexico, as evidence of its industry–leading performance within America’s top oil–producing basin.
IEEFA has undertaken an independent analysis of ExxonMobil’s position in the Permian. The findings of this analysis raise troubling questions about the quality of ExxonMobil’s Permian assets and their ability to sustain the industry–leading production that the company has been touting to investors.