ExxonMobil has reacted against plunging oil prices around the globe by saying it is going to drill deeper into untapped reserves in the so-called frontier areas, even as the price of crude barrels sinks to four-year lows, by declaring today that it would increase production by a massive 8% in the third quarter.
The Irving, Texas giant had net earnings of 8.2 billion at the end of September, which is a 12% decline over the previous year, but remains a massive cook-up up making it the energy top gainer in the S&P 500.
CEO Darren Woods celebrated the boom as disciplined growth in a volatile world, attributing it to both active shale expansions in the Permian Basin and exploration offshore Guyana, which, with green transitions and a looming government shutdown, doubled the efforts of the oil majors to be doubling down on fossil fuels.
ExxonMobil has a bigger stake than meets the eye. The revelation, which has been disclosed on a quiet earnings call due to federal furloughs, reveals. The 15% Permian boom pushed output to 2.5 million barrels a day, with a 4.1 million barrels a day boost propelled by the tech-enhanced fracking that reduced the breakeven cost to $35 per barrel.
In the African market, Guyana Stabroek block produced initial oil at the sixth project, where the reserves were estimated to be 11 billion recoverable barrels, and the cash flow would generate more than 20 billion annually by the end of the decade.
However, margins refining dropped 20% on poor diesel cracks, and profits at the downstream were cut to $1.1 billion, strapped by post-hurricane refinery restarts and Asian import surpluses. We are navigating through the headwinds with precision, and this explains why Woods told analysts that they have returned to the shareholders a total of 4.3 billion in buybacks and dividends with a healthy 3.8% yield.
To the energy stakeholders of the United States, the playbook by ExxonMobil sounds like thunder through the heart political landscape. The production ramp that increased its production by 300,000 barrels per day compared to last year protects 45,000 domestic jobs in Houston rigs to North Dakota pads, when competitors such as Occidental Petroleum are shutting down wells.
The closest competitor of ExxonMobil, Chevron, replicated the strategy through its 7% increase in output to 3.1 million barrels, but given the scale that Exxon has cultivated through its 2023 merger with Pioneer, it has an advantage over competitors in the shale endgame.
Investors, who watch OPEC+ to reduce further, see this as a tariff-immune fortification: the new Trump administration, with its all-drill baby drill, can be granted Alaska Arctic National Wildlife Refuge permits, which ExxonMobil has prime leases. Barclays analysts have updated their forecasts to project 35 billion dollars of free cash flow in 2026, an addition of 10%, assuming Brent will be trading at above 70.
Washington has broader faults attached to its fiscal side. The generosity of ExxonMobil is a contrast to a partial government shutdown that has bitten, and SNAP reductions are being threatened to 40 million people beginning today, as a contribution to workforce training in red states such as Texas and Pennsylvania.
Their low-carbon shift, such as the proposed carbon capture network of 15 billion dollars by 2030, undoubtedly turns bipartisan head nods, which would unlock up to two billion dollars of IRA subsidies per year.
However, environmentalists are crying foul over the so-called frontier push as climate sabotage: Guyana’s gas emission of flare gas compares to small countries, and Permian methane leakages continue to occur despite its 1-billion-dollar mitigation spending. The Sierra Club executive director referred to IEA warnings of peak oil demand by 2028, as he said, “This is addiction to yesterday’s fuel.
The decision of Wall Street was unquestionable. The ExxonMobil stock, with a bargain price of 12 times forward earnings, shot to 118, lifting the energy industry by 3% and pushing the S and P 500 toward 5,900.
The volume of options increased three times, with calls to a break of $130 in case Trump announces his energy secretary, a former Chevron executive, Mike Wirth, as exporter. Exxon is not gambling on the price, but on volumes, said Morgan Stanley’s Adam Parker, raising his target to $135. The rally extended to midstream players such as Enterprise Products, which were up 4% on takeaway capacity trades.
Obstacles stand in the way; there is no question. Fed hawkishness and the slowdown in China could plunge the world into a brewing recession that may demand crater, and U.S. inventories are already at 450 million barrels, representing a surplus of 5%.
Regulatory snarls continue: Biden-era methane ULS, unless revoked, add $500 million in prices, and the EU carbon border tax is coming over LNG shipments. Labour crunch takes a bite as well, as the number of rigs in operation stands at 600, with wage pressure being exerted on frackers as they unite under a union in the Bakken.
However, momentum moves in a bullish direction. The team at Woods signed a 10 billion JV with QatarEnergy in the development of the North Field in Qatar, which will earn them 4 million tons of LNG per year by 2027; this is sufficient to serve 10 million households.
At home, the refinery upgrade of Beaumont to 650,000 barrels per day makes Exxon a candidate for biofuel blends and 20% returns on sustainable aviation fuel. At the start of Q4, a shareholder powwow is coming in Dallas, and Woods promises to bring integrated resilience that would be a mix of black gold and blue hydrogen.
The gambit of ExxonMobil is no survival, but an energy sovereignty manifesto of Trumpian America. The beat of the drum is heard filling up, pumpjack to pumpjack in the Permian, in the Wall Street war rooms, make more, emit less, make a lot of profit.
With a world drowning in oil and thirsty for vision, this Texas titan blazes a trail that’s like the ground on which it drills oil that feeds engines, economies and philosophical arguments against its exhaustion. To the drillers, and to the dealers, and the dreamers, the frontier call of Exxon is as much of a siren song as it was to the people of the South West on the edge of the last energy era.