Darren Woods, CEO of ExxonMobil, has successfully steered the company through a period of scrutiny and underperformance, culminating in a significant turnaround. His initial years were marked by missed production targets and an investor rebellion, including a $22 billion loss in 2020. However, Woods consolidated his position after the pandemic by slashing costs, bringing in new executives, and committing to a dual strategy: maximizing returns from oil and gas while also investing in low-carbon technologies.
Key to this strategy was the $60 billion acquisition of Pioneer Natural Resources, which guarantees a steady supply of crude from the Permian Basin and is expected to add nearly 20% to Exxon's oil and gas production by the first half of 2024. Woods also made a $4.9 billion acquisition of Denbury, a carbon pipeline company, to underpin Exxon's $17 billion bet on low-carbon solutions like carbon capture and hydrogen by 2027. This includes plans to start the world's largest hydrogen power plant by 2027 and become a large-scale lithium producer for EV batteries.
While the low-carbon investments constitute about 11% of the company's annualized budget through 2027, Woods aims for these businesses to generate $1.7 billion to $3.4 billion in net income by 2027. This ambitious plan, although risky due to regulatory uncertainties and the nascent nature of carbon capture and hydrogen markets, has started to win over skeptical investors. Analysts like Neil Mehta of Goldman Sachs are optimistic, noting that Exxon needs to show these low-carbon ventures can generate solid double-digit returns and compete for capital within its portfolio. This strategic pivot has transformed Exxon into a company that publicly acknowledges the energy transition.
