Arab Today, arab today exxon mobil predicts dip in output
Last Updated : GMT 23:23:41
Arab Today, arab today
Arab Today, arab today

Exxon Mobil predicts dip in output

Arab Today, arab today

Arab Today, arab today Exxon Mobil predicts dip in output

New York - Arabstoday

Exxon Mobil Corporation said its 2012 oil and natural gas output would drop 3 per cent from last year even as it increases spending to bring several large new projects on line, and its shares fell 1.2 per cent. Despite the expected drop in 2012, production should increase by an average of 1 to 2 per cent annually through 2016, the company told analysts in New York. Oil companies like Exxon, Royal Dutch Shell and BP have struggled to increase oil and gas output in recent years, forcing them to raise their spending to record levels to tap into difficult-to-reach fields. “The production (outlook) was disappointing, certainly,” said Phil Weiss, analyst with Argus Research, and the weakness in US gas prices remained an “incremental negative” for the shares. Exxon, the world’s largest non-government-controlled producer of oil and gas, saw production rise 1 per cent last year to 4.5 million barrels of oil equivalent (BOE) per day. That modest growth came as the company spent a total of $36.8 billion, just shy of the $37 billion it expects to spend annually for the next five years. Exxon’s spending will go toward nine major project startups this year and in 2013, the company said, followed by 12 projects in 2014, which will help it bring on new production of more than 1 million BOE per day over five years. “The industry is in a period of high capital investment,” Exxon Chief Executive Rex Tillerson told the meeting. Spending on new projects is likely to push the company’s return on capital employed (ROCE) this year below the 24 per cent of 2011, he said. Tillerson also said Exxon is committed to exploring in Iraq’s autonomous Kurdish region, as well as to expanding its West Qurna output in southern Iraq. Those contracts signed last year with the Kurdistan Regional Government have been labeled as illegal by Baghdad, which has threatened to freeze the company out of its massive fields should it proceed. Iraq has set a deadline of the next few days for Exxon Mobil to explain its position the Kurdish oil agreements, an Iraqi government spokesman said earlier this week. “Obviously the country has a lot of issues it is dealing with, and we want to be helpful in that,” Tillerson said. While Tillerson declined to comment on whether he was looking at new acquisitions, he said that at current prices there were a number of interesting properties on the market in North America, and Exxon was seeing “a lot of very attractive things that are walking through the door.” Exxon spent $1.7 billion last year to buy two private companies that held large positions in the Marcellus Shale field, just a year after spending $30 billion to buy US natural gas producer XTO Energy. Those acquisitions have turned Exxon into the largest natural gas producer in the United States, but have increased its exposure to the weak natural gas prices here. Natural gas futures fell to fresh 10-year lows this week due to mild winter demand and bulging inventories of the fuel. Still, Joe Tatusko, a fund manager at Westport Resources Management who owns Exxon shares, said he still considered the company a good core holding, even though today’s gas prices indicate the company may have paid too much for XTO. “It’s still a very cheap stock after a good run,” he said. Tillerson said the company has been shifting its US drilling toward more liquids-rich plays in a “measured” way, but added that Exxon remains confident that its US gas fields will ultimately still benefit the company. “We don’t have to make a lot of money out of it now. We’re going to make a lot of money out of it in the years to come,” he said. Tillerson said the overall 2012 output forecast was based on Brent crude prices averaging $111 per barrel. A decline in that price to $90 would likely limit the decline to 2 per cent, while an increase to $130 per barrel would make the output decline rise to 4 per cent. Exxon said its production of liquids would grow 2 to 3 per cent annually on average through 2016, while its gas output would rise 0.5 to 1.0 per cent. Among the new projects coming on line is the Kearl Oil Sands development in Canada, which is expected to begin operations late this year with an initial production target of 110,000 barrels per day.

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Arab Today, arab today exxon mobil predicts dip in output Arab Today, arab today exxon mobil predicts dip in output

 



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