Exxon Mobil (XOM) - Get Free Report shares jumped higher Wednesday after the biggest U.S. oil company unveiled plans to boost capital spending on low carbon projects as it moves forward under a new board comprised of activist climate-focused investors.
Exxon said it will meet its target to reduce greenhouse gas emissions by between 15% and 20% -- from 2016 levels -- by the end of this year, nearly four years ahead of its prior forecast. As it continues to transition to more sustainable earnings growth, Exxon said it sees total addressable markets for carbon capture and storage rising to $2 trillion. Downstream and chemical earnings, Exxon said, will likely triple through 2027, while capital investments will remain in the range of $20 billion to $25 billion per year.
The spending boost, Exxon said, will generate double-digit returns even if oil prices fall to as low as $35 a barrel, a pledge that will ease concerns for dividend payments.
Exxon rival Chevron Corp. (CVX) - Get Free Report said it will triple its capital investment plans over the coming years as part of its transition to lower carbon businesses amid reports of an activist investor challenge in mid-September.
The plans followed a meeting with executives at Engine No. 1, the activist hedge fund that won a proxy battle for seats on the board at Exxon Mobil earlier this year.
“The restored strength of our balance sheet and improved financial outlook support accelerating investment in our industry-advantaged, high-return projects, and a growing list of financially accretive lower-emission business opportunities,” said CEO Darren Woods. “Our strategy is designed to create shareholder value by leveraging our competitive advantages while maintaining flexibility to respond to future policy changes and technology advances associated with the energy transition.”
Exxon Mobil shares were marked 1.85% higher in early Wednesday trading to change hands at $60.95 each, a move that would extend the stock's three-month gain to around 12.1%.
Exxon Mobil posted stronger-than-expected third quarter earnings of $6.8 billion in late October and unveiled plans to repurchase around $10 billion in shares over the next two years.
Group revenues, Exxon said, surged 60% to $73.9 billion, again topping analysts' estimates of a $73.34 billion tally, as production levels rose to 3.7 million barrels per day, as the group continues to ease its reliance on fossil-fuel gains amid shareholder pressure from vocal activists.