March 5, 2020 / 1:58 PM / 23 days ago

Exxon CEO sticks to spending targets as oil prices tumble

FILE PHOTO: FILE PHOTO: A logo of the Exxon Mobil Corp is seen Rio de Janeiro, Brazil September 24, 2018. REUTERS/Sergio Moraes/File Photo/File Photo

NEW YORK (Reuters) - Two years into an ambitious growth plan to revive earnings at the largest U.S. oil company, Exxon Mobil said on Tuesday it would stick to its spending plans even as its rivals trim costs.

Exxon faces oil prices that have fallen over 20% this year, the lowest natural gas prices in decades, a long-term industry outlook too is clouded by a push toward cleaner fuel and pressure from investors for higher returns.

It plans to spend between $30 billion and $35 billion a year through 2025, with about $33 billion in capital expenditure this year.

The company’s growth strategy “will lead to sustained improvement in shareholder value,” Exxon’s Chief Executive Officer Darren Woods said in New York, where the company held its annual investor day meeting.

Exxon’s growth plans include a big bet on U.S. shale, where output has surged, making the United States the world’s largest oil producer, and on Guyana, where an Exxon-led consortium has made one of the biggest discoveries in years.

On Tuesday, Exxon’s closest U.S.-rival Chevron showed off its own war chest by highlighting it has up to $80 billion that it could use for shareholder returns over the next five years regardless of trading prices for oil.

As the two companies race to become the first to produce 1 million barrels of oil-equivalent per day in Permian, the top U.S. oilfield, Exxon said Thursday that it will exceed that target by 2024.

The entire oil industry has fallen out of favor with investors, but Exxon, once the industry’s cash flow and profits leader, has tumbled particularly hard.

Total returns for Exxon over the last five years have fallen into negative territory, while the S&P 500 returned 64%. Rivals Chevron, Total and BP have seen positive returns, while Royal Dutch Shell has been flat.

Reporting by Jennifer Hiller in New York and Shariq Khan in Bengaluru; Editing by Arun Koyyur and Chizu Nomiyama

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