On Wednesday, Exxon Mobil is set to brief Wall Street on its spending plans, after investors wanting to know how it will balance oil and low-carbon initiatives without compromising on their returns.
Exxon Mobil, the largest U.S. oil producer, has slashed costs by putting on the breaks on several large expenses while boosting investment in low-carbon ventures.
Its briefing will provide analysts their first opportunity to quiz executives on spending and proposed new investments in carbon capture and biofuels.
“Exxon’s disclosure of expected returns targets are the “main concern” for shareholders,” said Ben Cook, portfolio manager at Hennessy BP Energy Transition Fund. He went on to add, Exxon’s “nearly 6% dividend yield is critical to investors”.
The company’s planned 400% increase in spending in low-carbon ventures through 2027 to $15 billion has raised “the question of which legacy projects will be pushed out and whether the new low-carbon investments could generate comparable returns” to oil, said Paul Cheng, an analyst at Scotiabank.
Exon’s brief will be the first under a board that includes three new members elected last spring by investors demanding the company cut spending, boost returns and better address climate concerns.
Exxon has pivoted from questioning climate change to viewing it as a business opportunity.
“Investors will want to hear whether Exxon’s increased spending on carbon capture and clean fuels will require cutting some oil and gas projects,” said Cheng. “Low-carbon could remain a drag to the company’s overall portfolio”.