Exxon’s US$50-billion bonanza returns spending to pre-rout level

ExxonMobil Corporation is set to spend US$50 billion over the next half decade in a return to the oil giant’s spending habits before crude suffered its worst price rout in a generation.

With oil prices now hovering above US$65/bbl in New York, Exxon CEO Darren Woods disclosed a programme which includes the Permian basin of West Texas and New Mexico, a hotbed of US shale drilling where Exxon has been aggressively expanding for years.

In a blog post on the 29^th January, Mr Woods, a second-year CEO at the world’s biggest oil explorer by market value, cited President Donald Trump’s US tax overhaul as a significant enabler of the plan. But it basically just returns the investment program to 2012-2016 levels, when crude prices peaked.

Exxon’s capital budget for American projects averaged US10.5 billion a year during that period, an average that fell when 2016 spending plunged to less than US$6 billion, the data showed.

During the first nine months of 2017, the Texas-based company spent US$4.3 billion in the US; the full-year figure won’t be available until Exxon discloses 2017 results on the 2^nd February.

The news of the US$50-billion programme was originally broken in a tweet on the 29^th January by US Representative Kevin Brady, the Texas Republican whose district is home to Exxon’s largest corporate campus.

Mr Woods’ blog post was short on specifics. Other than referencing the Permian region, he wrote that the spending will “expand existing operations, improve infrastructure and build new manufacturing sites. This will create thousands of jobs, strengthen the US economy and enhance energy security.”

The queue of projects will be in addition to US$20 billion in investments that Exxon announced last year, Mr Woods said.

To be sure, the company was roundly criticised after last year’s announcement when it became clear the figure included projects that dated as far back as 2013.