With others cutting back on capital spending, ExxonMobil plans to spend more

03/11/2010 4:53 pm EST


Jim Jubak

Founder and Editor, JubakPicks.com

ExxonMobil (XOM) goes its own way. Again.

When oil prices were soaring in 2006 and 2007, ExxonMobil refused to get sucked into a race to see who could spend more on exploration.

Now that everyone else is cutting back on capital budgets (and some companies such as Chevron (CVX) are cutting jobs) ExxonMobil has announced that it will increase capital spending by 4% in 2010 to almost $28 billion.

But that extra money isn’t going into drilling, exploring, or developing oil. Instead ExxonMobil is increasing an already big bet on natural gas. (The company bought U.S. natural gas producer XTO Energy (XTO) for $28 billion in stock in a deal that’s expected to close in the second quarter of 2010.)

You can see the emphasis on spending on natural gas projects in 2009-2012 just be scanning the company’s March 11 presentation to analysts. (You can find a copy of that presentation here http://media.corporate-ir.net/media_files/webcast/2010/mar/Exxon/final.pdf )

New acquisitions that the company highlights include 290,000 acres in the Marcellus natural gas shale formation and in Canada’s Horn River gas shale region.

Project start ups in 2009 include the Qatargas Trains 4 and 5, RasGas, Al Khaleej Gas, and the Adriatic and South Hook liquefied natural gas (LNG) terminals.

For 2010-2012 the two projects that start the company’s list are RasGas Train 7 and the Golden Pass LNG terminal.

You have to travel further down the timeline to find significant mention of potential new oil production.

The company has completed initial tests at Iraq's West Qurna field and plans exploration in 2010 and 2011 in offshore fields in Southeast Asia, the Black Sea, Libya, and Brazil.

ExxonMobil, said CEO Rex Tillerson, projects that oil and natural gas production will climb 3% to 4% in 2010. That’s sure a lot better than Chevron’s recent forecast of a 1% increase in production this year.

These may be tough times for Western oil majors but ExxonMobil continues to be the star of the class.
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