Exxon Mobil Lays Out to Plan Cut Debt, Grow Dividend

Exxon Mobil's plans include a new division to develop low-emission technology.
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Exxon Mobil  (XOM) - Get Report on Wednesday laid out plans through 2025 to boost earnings and cash flow, grow its dividend, fund projects and slash debt, as the oil company giant works to reassure investors following a year in which it experienced its first-ever loss as a public company. 

Shares of the Irving, Tex. company were up 0.68% at $56.45 in pre-market trading.

In a statement released ahead of an investor day, Chairman and CEO Darren Woods said the company expects the investments to generate returns north of 30%.

The company noted that future spending plans take into account potential market volatility as the economy recovers from the pandemic.

Exxon Mobil plans capital spending of $16 billion to $19 billion in 2021 and $20 billion to $25 billion per year through 2025 on "high-return, cash-accretive projects."

Woods said 90% of Exxon Mobil's upstream investments in resource additions, including in Guyana, Brazil and the U.S. Permian Basin, generate a 10% return at $35 per barrel or less.

Downstream investments improve net cash margin by 30% and chemical investments grow high-value performance products by 60%.

The company has also created a new business Exxon Mobil Low Carbon Solutions to develop low-emission technology in support of the Paris Agreement on climate change. 

Exxon Mobil said it will focus on challenging areas of the economy that are responsible for about 80% of energy-related emissions, such as commercial transportation, power generation and heavy industry. 

On Monday, the company said it would add activist investor Jeff Ubben to its board.

Exxon had added former Pentronas CEO Tan Sri Wan Zulkiflee Wan Ariffin to its board as activists mounted pressure on the company to accelerate its transition to lower-carbon strategies following the release of its 2020 numbers on Feb. 2.

The oil industry has been battered by the coronavirus pandemic shutdown. In October, Exxon Mobil said it plans to cut 1,900 jobs in the U.S., while reducing its global headcount by around 15% over the next two years.

Exxon is facing record debt of nearly $70 billion, nearly double the level at the end of 2018, Bloomberg reported.

In January, the Houston Chronicle reported that more than 100 oil and gas companies declared bankruptcy in 2020 due to the pandemic.