ExxonMobil's Q3 2025: Contradictions Emerge on Permian Production, Dividend Strategy, Low-Carbon Investments, Mozambique Timelines, and CapEx Pacing

Guidance:

• Expect to be below the low end of the $27–$29B cash CapEx range this year (excludes ~$2.4B of M&A).
• ~25% of wells to use the patented lightweight proppant this year; ~50% of new wells expected by end-2026.
• Ten 2025 start-ups are expected to drive >$3B of earnings contribution next year at constant prices and margins.
• Hammerhead sanctioned with production targeted in 2029; Guyana production exceeded 700kbd in the quarter.
• Mozambique onshore development progressing with improved security and government engagement toward FID.

Business Commentary:

* Operational Success and Growth: - ExxonMobil reported a record production of more than 700,000 barrels per day in Guyana, with the Yellowtail development producing 250,000 barrels per day. - The company's Permian Basin production also set a new record of nearly 1.7 million barrels per day. - Growth was driven by successful development of major projects and the implementation of innovative technologies like lightweight proppant.

• Capital Expenditure and Strategic Focus:
• ExxonMobil indicated it will likely be below the low end of its CapEx guidance range of $27 billion to $29 billion for 2025.

• This is attributed to uncertainties in the development of new technologies and markets, such as carbon-based solutions.

• Technological Advancements:

• The company expects about 1/4 of its wells will use its new patented proppant by the end of 2026, aiming to improve well recoveries by up to 20%.

• The advancements are part of ExxonMobil's strategy to differentiate itself with proprietary technology in the competitive unconventional business.

• Refining and Product Solutions:

• ExxonMobil's Resid Upgrade project in Singapore began commercial operations, converting low-value fuel oil into high-value lubricant products, with current utilization at 80%.
• The company is also advancing its revolutionary battery anode graphite, with promising testing results indicating significant improvements in lithium-ion battery performance.

Sentiment Analysis:

Overall Tone: Positive

• Management repeatedly emphasized strong execution and innovation: "we delivered our highest earnings per share compared to other quarters in a similar price environment," "we feel good about the progress we're making," and "I'm confident we will remain in a league of our own." Comments highlighted record production (Guyana, Permian), project starts, and structural cost savings driving confidence.

Q&A:

• Question from Neil Mehta (Goldman Sachs): You indicated you'll be below the CapEx range this year — is that due to capturing deflation, deferring investment in low‑carbon solutions, or other drivers?
  Response: CapEx is being paced: spend is being deferred in nascent low‑carbon ventures because markets haven't developed as fast as expected; variability also reflects timing uncertainty of project FIDs and improved Permian capital productivity.

• Question from Devin McDermott (Morgan Stanley): On Permian record production and raised guide — are gains from the proppant rollout or other development/spacing changes, and how does this affect capital/activity for multiyear growth?
  Response: Permian outperformance is driven by multiple technology and operational improvements (including proppant) rather than a single change, raising productivity and enabling more effective capital deployment.

• Question from Arun Jayaram (JPMorgan): How does Exxon's global outlook through 2050 (oil +5%, gas +20%, LNG doubling) inform strategy and future organic/inorganic choices?
  Response: The long‑term outlook underpins strategy: prioritize cost‑advantaged oil and LNG investments to meet expected demand and offset depletion, guiding both organic projects and selective inorganic opportunities.

• Question from Douglas George Blyth Leggate (Wolfe Research): Free cash flow has grown yet dividend growth is modest — when will FCF expansion translate to faster dividend increases?
  Response: Dividend policy prioritizes sustainability and competitiveness across cycles; management favors gradual, reliable growth rather than rapid increases to ensure resilience through commodity swings.

• Question from Bob Brackett (Bernstein): What exactly was acquired from Superior Graphite — facilities or technology — how integrated with refining/petrochemicals, and TAM?
  Response: Acquired key assets and technology rights to scale a modern graphitization process for anode material; integration leverages Exxon's process capabilities to produce low‑cost anodes with a TAM management cites up to ~$40B.

• Question from Sam Margolin (Wells Fargo): Given capital efficiency and a strong balance sheet, can you step up inorganic activity beyond current pipeline?
  Response: Company will pursue inorganic deals only where core advantages create outsized returns (1+1>3); they screen many opportunities but transact on very few that meet high criteria.

• Question from Paul Cheng (Scotiabank): Are you bumping up against organizational capability limits given the volume of projects, or is pace set by opportunity set?
  Response: Execution capability is strong—limitations stem from the opportunity set and strict project criteria; management believes they can scale further and cites recent delivery of many large projects as proof.

• Question from Biraj Borkhataria (RBC): Status of Mozambique onshore development and likelihood of an early‑2026 FID given security/government interactions?
  Response: Mozambique is progressing well: security has improved, relationships with government are strong, working closely with Total, and the project is moving ahead toward FID.

• Question from Ryan Todd (Piper Sandler): What exploration opportunities are on the horizon next 12–24 months and has your exploration approach changed?
  Response: Exploration is focused on materially sized, commercially attractive targets using improved seismic and technology; approach is narrower and more targeted, but findings must still translate into successful discoveries.

• Question from Wei Jiang (Barclays): With hyperscalers contracting gas power plus carbon capture, any appetite to offer traditional power first then add CCUS later?
  Response: Focus is on carbon‑abated power (molecule plus capture); Exxon aims to provide decarbonized gas with capture for data centers and partner with IPPs for the electron side, engaging hyperscalers actively.

• Question from Jean Ann Salisbury (BofA): Any granularity on where the proppant improves recovery most (gassier vs oilier zones, depth) and strength of patents/barriers to entry?
  Response: Recovery gains depend on rock properties and flow penetration; optimization is ongoing and proppant is one of multiple complementary technologies, and management believes patents and raw‑material supply provide meaningful protection.

• Question from Jason Gabelman (TD Cowen): What's driving the industry's renewed exploration push and will competition for new blocks intensify?
  Response: Industry is shifting to longer‑cycle projects as unconventional longevity limits become apparent; Exxon's execution, technology and speed-to-market give it a competitive edge when contesting high‑value blocks.

• Question from Paul Sankey (Sankey Research): Thoughts on AI CapEx boom and its impact on Exxon given you lowered CapEx guidance?
  Response: CapEx discipline remains; lower near‑term guidance reflects pacing of uncertain new ventures, not base activity cuts; AI is being deployed internally to optimize operations and supports low‑carbon data center offerings.

• Question from Phillip Jungwirth (BMO): How do you view current refining margins amid supply dynamics and what's the rationale/positioning for the Baytown FID?
  Response: Refining margins benefit from cheaper crude feed and tighter product markets; Exxon is high‑grading its refinery footprint (e.g., CRISP, Baytown) to convert lower‑value molecules into higher‑value products with resilient returns.

Contradiction Point 1

Permian Production Growth and Strategy

It involves ExxonMobil's strategy and expectations for Permian production growth, which is a crucial aspect of the company's long-term business outlook and investor expectations.

What factors led to your decision to underspend on CapEx this year? What are the key variables? - Neil Mehta (Goldman Sachs Group, Inc., Research Division)

2025Q3: We are pacing our CapEx spend based on market development and sales of new ventures like low-carbon solutions. The market is not developing as fast as initially planned, leading to a slower pace. - Darren Woods(CEO)

Can you elaborate on M&A opportunities? How does organic growth and technology drive market value? - Devin J. McDermott (Morgan Stanley)

2025Q2: Our technology advantages enable a different view of Permian production. We aim to double recovery levels and are on track to do so. - Darren Woods(CEO)

Contradiction Point 2

Dividend Growth Strategy

It involves ExxonMobil's strategy regarding dividend growth, which is a critical component of its financial and investor relations strategy.

Why is Exxon's dividend growth rate so low given strong cash flow growth? - Douglas George Blyth Leggate (Wolfe Research, LLC)

2025Q3: We focus on reliable dividend delivery, maintaining long-term business sustainability across commodity cycles. We prioritize strategic investments and remain confident in our dividend strategy. - Darren Woods(CEO)

What lessons have you learned from recent downstream projects, and what are your future growth ambitions? - Stephen I. Richardson (Evercore ISI)

2025Q2: We see continued, robust free cash flow generating potential from our ongoing operations and believe we'll continue to grow the dividend per share at a high single-digit percentage per year over this period. - Darren Woods(CEO)

Contradiction Point 3

Low-Carbon Business and CapEx Allocation

It involves ExxonMobil's approach to low-carbon business opportunities and the allocation of capital expenditure, which are critical for the company's long-term sustainability and investment strategy.

What drove the decision to underspend on CapEx this year? What are the moving pieces here? - Neil Mehta (Goldman Sachs Group, Inc., Research Division)

2025Q3: The $27 billion to $29 billion CapEx guidance excludes M&A transactions, which were not planned for. Investments are focused on projects where we see robust returns, and we continue to monitor and adjust spending based on market conditions. - Kathryn Mikells(CFO)

How do you assess low-carbon business opportunities and CapEx changes compared to the December Analyst Day? - Wei Jiang (Barclays Bank PLC)

2025Q2: Our low-carbon projects are making progress, with a focus on carbon capture and storage. The Baytown hydrogen plant faces challenges with timing and market development. - Darren Woods(CEO)

Contradiction Point 4

Mozambique Onshore Development

It involves the status and timeline of a significant strategic project, which impacts long-term planning and investor expectations.

What is the status of the Mozambique onshore development and when is FID expected? - Biraj Borkhataria (RBC Capital Markets, Research Division)

2025Q3: Mozambique is progressing well with strong government relations. Security has improved, and recent meetings with the government were positive. We are moving ahead with the project, and the FID is still under consideration. - Darren Woods(CEO)

Will CapEx be delayed due to policy and tariff uncertainties, and what is the rationale for the Mozambique deal? - Biraj Borkhataria (RBC)

2025Q1: ExxonMobil's CapEx plans remain on track. Future capital spending is not significantly impacted by policy uncertainties. In Mozambique, the focus is on leveraging ExxonMobil's project management strengths to ensure optimal stake and project configuration. - Darren Woods(CEO)

Contradiction Point 5

Capital Expenditure (CapEx) Strategy

It involves the company's approach to capital spending, which directly impacts financial planning, resource allocation, and investor expectations.

What are the reasons for spending below the CapEx range this year, and what are the key factors driving this decision? - Neil Mehta (Goldman Sachs Group, Inc., Research Division)

2025Q3: We are pacing our CapEx spend based on market development and sales of new ventures like low-carbon solutions. The market is not developing as fast as initially planned, leading to a slower pace. - Darren Woods(CEO)

Acknowledging the portfolio's resilience, under what market conditions would you exercise flexibility, and how do you balance this with operational momentum? - Betty Jiang (Barclays)

2025Q1: We are managing our 2025 CapEx guidance to reflect the disciplined approach we took in planning, adapting to the market conditions and taking advantage of opportunities as they arise. - Kathryn Mikells(CFO)