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ExxonMobil Corp  (NYSE:XOM)
Q3 2018 Earnings Conference Call
Nov. 02, 2018, 9:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, everyone. Welcome to this ExxonMobil Corporation Third Quarter 2018 Earnings Call. Today's call is being recorded.

At this time, I'd like to turn the call over to the Vice President of Investor Relations and Secretary, Mr. Neil Hansen. Please go ahead, sir.

Neil Hansen -- Vice President of Investor Relations and Secretary

Thank you. Good morning, everyone. Welcome to our third quarter earnings call. We appreciate your participation and continued interest in ExxonMobil.

This is Neil Hansen, Vice President of Investor Relations. Joining me on the call today is Jack Williams. Jack is the Senior Vice President with responsibility for the Downstream and Chemical business lines.

As we'll discuss on the call today, we are very pleased with our performance in the third quarter. It was a quarter highlighted by strong operating performance, significant growth in liquids production, and considerable value from our integrated business model. As a result, we delivered the highest level of cash flow from operating activities since 2014.

In addition, we completed several advantaged projects and made significant progress on investments that will generate long-term accretive value for our shareholders.

After I review the quarterly financial and operating performance, Jack will provide his perspectives on third quarter results and give an update on several key investments and strategic focus areas. Jack and I'll be happy to take your questions following our prepared remarks.

Our comments this morning will reference the slides available on the Investors section of our website. I'd also like to draw your attention to the cautionary statement on slide two and the supplemental information at the end of the presentation.

I'll move now to slide three, which summarizes a number of developments that influenced our third quarter performance. As I mentioned previously, cash flow from operating activities was the highest it's been in four years, dating back to the third quarter of 2014. Corporate charges for the quarter were outside the $700 million to $900 million range that we typically experience. This was due to net favorable absolute one-time items of $420 million, primarily related to tax. It's important to note that we expect fourth quarter corporate charges to be at the high-end of the normal range of $700 million to $900 million.

Crude oil prices increased slightly during the quarter with Brent up $0.92 and WTI up $1.71. Permian tight oil production increased by 17% relative to the second quarter. We continue to ramp up drilling activities in the Permian, while also maximizing the value from our integrated midstream and manufacturing operations. We had lower levels of downtime in the third quarter and stronger operating performance in Canada, where Kearl delivered quarterly record net production of 230,000 barrels per day. We also achieved a number of significant milestones on long-term Upstream growth plans in Guyana and Brazil. Jack will discuss this a bit later in the call.

In the Downstream, tighter supply resulted in stronger fuels margins in Europe, while wider crude differentials contributed to improved margins in North America. We successfully leveraged our midstream logistics capacity to capture significant value by moving advantaged crudes from the Permian and Western Canada to our manufacturing facilities. Improved utilization from lower scheduled maintenance and better reliability also contributed to stronger earnings in the quarter.

In line with our strategy to grow sales of higher-value products, we successfully started up a new hydrofiner at our Beaumont, Texas facility and a delayed coker at our Antwerp refinery. The hydrofiner will increase production of ultra-low sulfur fuels by 45,000 barrels per day, using a proprietary catalyst that will remove sulfur while minimizing octane loss. The Antwerp delayed coker will increase supply of distillates and marine gas oil, further strengthening our Downstream portfolio ahead of IMO 2020.

Our long-term demand fundamentals remained strong in the Chemical business, we experienced weaker margins during the quarter. Improved realizations were more than offset by higher feedstock costs, primarily US ethane. A significant scheduled turnaround at our Singapore facility also impacted quarterly results. We continue to expand chemical manufacturing on the US Gulf Coast. This included start-up of the 1.5 million metric ton per year ethane cracker at our Baytown, Texas chemical and refining complex.

Moving to slide four, which provides an overview of third quarter financial results. Third quarter earnings were $6.2 billion, $1.46 per share, up 57% from the prior-year quarter.

Cash flow from operations and asset sales was $12.6 billion, including a $1.5 billion in proceeds from asset sales.

Third quarter CapEx was $6.6 billion. We continue to progress investments to support our long-term growth plans, including increased activity in the Permian and the acquisition of additional acreage in Brazil. CapEx through the first three quarters of the year was $18.1 billion. Now, if you exclude the acquisition of incremental Brazil acreage of about $1 billion, we remain on pace to meet full-year guidance of approximately $24 billion.

Free cash flow after investments was $7.2 billion, more than enough to cover the $3.5 billion in dividends.

Debt ended the quarter at $40 billion, a $1.2 billion decrease compared to the second quarter, and as a result, we've reached the lowest level of debt that we've had since the end of 2015.

Cash increased to $5.7 billion at the end of the quarter. The increase was -- this increase which was above our normal operating levels, due primarily to the timing of proceeds from the Germany retail divestment, which closed in the fourth quarter. Again, we received those proceeds the day before the quarter ended and the transaction closed on October 1. We don't have the earnings impact in this quarter, but we did received the cash.

I'll start the more detailed review of our third quarter results with a reconciliation of Upstream financial and operating performance. Slide five provides a look at Upstream results relative to the second quarter. Liquids growth contributed to Upstream earnings of $4.2 billion, a $1.2 billion increase. Gas prices increased by 7%. Crude realizations were essentially flat, impacted by wider Permian and Western Canadian differentials. However, and we look at this, the estimated unfavorable impact of those wider differentials on our Upstream was $170 million, but given our integrated logistics and manufacturing position, that value and more was captured in the Downstream. Having the takeaway capacity that we have that exceeds our Upstream production allows us to -- allowed us to realize a corresponding estimated benefit of approximately $280 million in the Downstream.

Lower scheduled downtime and the absence of impacts from the PNG earthquake, increased Upstream earnings by $130 million. The increase in production, in addition to the volume recovery we saw from lower downtime, contributed $320 million to third quarter earnings.

Other items, included net, absolute favorable one-time tax impacts of $370 million.

And moving on to slide six and the comparison of third quarter Upstream production to the second quarter of this year. Oil equivalent production in the quarter was 3.8 million barrels per day, an increase of 139,000 oil equivalent barrels per day. Excluding the impact of entitlements and divestments, volumes were up 5% as a result of improved operations and a continued focus on growing volumes with the highest value.

Liquids increased 3%, driven by continued growth in the Permian and improved performance at Kearl.

Natural gas production was up 5%, lower downtime across the LNG portfolio, including Qatar, PNG and Gorgon.

Moving to slide seven and the comparison of third quarter Upstream earnings with the third quarter of 2017. Higher prices increased earnings by $2.6 billion, driven by a $19 per barrel or 41% improvement in crude realizations, and a 30% increase in natural gas prices. Again, we estimate the unfavorable impact of wider Permian and Western Canadian differentials on our Upstream results in relative to last year to be approximately $360 million. The total estimated benefit, though, that we captured in the Downstream from our fully integrated value chain is $590 million compared to the third quarter of last year.

Downtime decreased earnings by $80 million, which was largely driven by carryover from the second quarter Syncrude outage. And just to give you an update, as of mid-September, all cokers at Syncrude were back online.

Other volume impacts increased earnings by $130 million, liquids growth largely driven by US unconventional and Hebron was partly offset by the impact from lower entitlement volumes.

Slide eight provides us a comparison of third quarter volumes relative to the same period of last year. Oil equivalent production declined by approximately 90,000 barrels per day. However, and this is important, if you exclude the impact of entitlements and divestments, volumes increased by more than 60,000 with liquids production up 6%, including 57% growth in the Permian.

Gas decline year-over-year was mostly in US unconventional, and aligned with our focus on value and our near-term prioritization of liquids growth opportunities.

Lower entitlements resulting from higher prices, reduced volumes, as did continued efforts to high grade our portfolio. And the largest impacts came from the divestments of our operated assets in Norway and a number of US Rockies Gas assets.

Increased downtime in the quarter was driven by carryover, again of the second quarter unplanned outage at Syncrude.

Liquids growth more than offset decline from mature fields. This was led by the significant increase in unconventional Permian and Bakken production, and the continued ramp-up at Hebron. Improved performance at Kearl also contributed to the increase in volumes.

Moving now to slide nine, I'll review Downstream third quarter financial and operating results, starting first with the comparison to the second quarter. Downstream earnings of $1.6 billion increased by $918 million, crude (ph) operations and the capture of significant value from our integrated business model.

Refining margins strengthened in North America, supported by wider crude differentials and in Europe with tighter supply. Stronger margins contributed $150 million to earnings. As previously mentioned, our integrated logistics network that allowed us to connect barrels in the Permian and Western Canada to our manufacturing facilities enabled us to capture significant benefit from wider differentials. And we estimate the favorable impact of the Downstream to be approximately $280 million versus the previous quarter.

Lower levels of scheduled maintenance and improved reliability increased earnings by $460 million.

The absence of last quarter's unfavorable foreign exchange impacts resulted in a positive $140 million contribution to earnings. So, let me tell you, the absolute impact from foreign exchange on third quarter earnings was immaterial like there was about a $15 million help.

And then finally, other items, included improved refining yield and mix and minor asset sales gains.

Right. Now, moving to slide 10, the comparison of current quarter Downstream earnings relative to the third quarter of the prior year. Downstream earnings for the quarter were up $110 million. Margins had a negative impact on earnings, a slightly more than $100 million. This was mostly driven by lower lubricants and fuels margins in Europe and Asia Pacific. The absence of supply tightness that resulted from Hurricane Harvey last year also impacted our relative margins.

Now, before I move on, let me give you some additional perspective on lubricants margins. With higher feed costs and softer market fundamentals for basestocks, the negative impact on third quarter earnings from lubricants margins was more than $200 million compared to last year. And then if you look at it on a year-to-date basis, we've experienced approximately $500 million in downward pressure from lubricants margins. This was partly offset again by our ability to successfully capture approximately $590 million of benefit across our value chain from wider Permian and Western Canadian differentials.

Downtime and maintenance resulted in a $10 million negative impact in quarter-over-quarter earnings, higher maintenance activities were offset by the absence of the volume and expense impacts that resulted from Hurricane Harvey last year.

Other items reflecting impacts of the lower US tax rate, benefits from minor asset sales gains and improved refining yield and mix.

Moving now to Chemical financial and operating results on slide 11, starting first, with the comparison of the third quarter with the second quarter. Third quarter Chemical earnings were $713 million, a $177 million decrease. This was mainly driven by higher planned maintenance, partly offset by growth in sales of higher-value products.

Margins decreased by $20 million as increased ethane prices impacted polyethylene margins. This was mostly offset, though, by stronger aromatics margins.

Sales volumes increased earnings by $40 million with higher polyethylene demand and contribution from our new assets in Singapore and the US.

Downtime and maintenance negatively impacted earnings by $140 million, mainly driven by planned turnaround activities in Singapore.

The other items you see there included some unfavorable foreign exchange impacts.

Turning now to slide 12, and a review of current quarter Chemical earnings relative to the third quarter of last year. Lower margins resulted in a decrease of $140 million, higher feed and energy costs outpacing stronger realizations.

Higher product sales improved earnings by $30 million, supported by an increase in sales from new assets.

Downtime and maintenance had a negative impact of $90 million, again this was driven by the Singapore turnaround. It was partly offset by the absence of last year's impacts from Hurricane Harvey.

Other items included operating expenses for the new assets, and upcoming projects as we continue to position our Chemical portfolio for long-term accretive growth. An unfavorable ForEx also had an impact on earnings.

Slide 13 provides a review of sources and uses of cash. Third quarter earnings adjusted for depreciation expense and changes in working capital yielded $11.1 billion in cash flow from operating activities. Asset sales contributed $1.5 billion in the quarter, including proceeds with the previously mentioned Germany retail divestment, which again closed in the fourth quarter. In line with our capital allocation strategy, cash flow from operations and asset sales wholly funded year-to-date investments and shareholder distributions. We've also been able to reduce debt levels, further strengthening our industry-leading financial flexibility.

Cash used to fund investments and shareholder distributions in the third quarter were $5.4 billion and $3.5 billion, respectively. Our ending cash balance of $5.7 billion was up $2.3 billion from the prior quarter, and again, this was driven primarily by the timing of asset sales proceeds.

At this time, I'd like to turn it over to Jack, he will provide some additional perspectives on third quarter performance and discuss the progress we've made on the long-term growth strategy we outlined at the 2018 Analyst Meeting.

Jack Williams -- Senior Vice President

Well, thank you, Neil. Glad to be here today, and I'd like to thank all the folks on the line today for their interest in ExxonMobil.

Let me make a couple of comments about the quarter and then I'll go into some more update on the strategic progress. We're very pleased with the business progress that's reflected in the third quarter results. First, if you look at the Upstream, if you ex-entitlements and divestments, the net positive volumes growth versus both sequential and year ago quarters really bodes well as it reflects the contribution from just one of the five key growth areas that we talked about back in March, and that's, of course, the Permian. I'd also add that the Hebron ramp-up contributed significantly as well, and it's also going very well.

In the Downstream, as Neil mentioned and quantified earlier, we're seeing the benefits of this integration across the value chain. And we're capturing value from low-cost crude feedstock that we purchased in Midland and Edmonton for our Gulf Coast and Midwest refineries. And that's enabled by the strong logistics position that we have. And, of course, in both the Upstream and the Downstream, we're very pleased with the improved reliability. This level of performance is much more in line with our ongoing expectations, and has continued into October as well.

Now, the Downstream did benefit from seasonally lower refinery turnaround activity and in the fourth quarter, you should see scheduled maintenance activity more in line with second quarter levels.

In the Chemicals business, we are seeing some near-term impacts of recent industry supply growth, including our own, which does not change our view of the long-term attractiveness of this business. The fundamentals continue to remain strong. Our growth plans remain on track and that's evidenced by the recent start-up of the new Baytown steam cracker. So all in all, a good quarter.

So now, let me cover a few slides to highlight some of the progress we're making in our Downstream and Chemical businesses. I'll start with a reconnect in the Downstream, and what we talked about that was the key driver for Downstream earnings growth is this yield shift to grow higher value products, and that's largely due to the deployment of our proprietary catalyst and process technology. Now, this yield shift is accomplished primarily through six advantaged refining projects, three of these are in the near-term, the Beaumont hydrofiner and Antwerp coker, both of which are now online, and then the Rotterdam advanced hydrocracker which should start up around year-end. And just for completeness, the other three of the poly (ph) hydrofiner, Beaumont light crude expansion in the Singapore is the upgrade project.

So, just a couple of comments on that. When I say advantaged, what I mean there is that, either due to proprietary technology application or to integration benefits, or both, these projects generate from mid-teens to mid-20s discounted cash flow returns. And when I say primarily, in terms of the primarily those six projects, those projects really are needle movers in that regard. But there's also a few hundred other smaller optimization projects that are collectively having a big impact as well. As a matter of fact, as you think about the 2018 and 2019 turnarounds, in over 80% of those, the scope includes work on these small optimization projects. And I think it's really a great example of how our Downstream teams are continually working to improve the performance of our assets.

And the other main strategic area for us is this integration across the value chains and in the Permian, we really have a unique position that's already generating additional value to date. We're progressing a very attractive pipestill expansion at Beaumont and we're further building our logistics position to capture the advantaged feeds on the Gulf Coast integrated facilities. I'll talk more about that logistics in a second.

On Beaumont, just a quick reminder on that project. We're adding 250,000 barrel a day atmospheric pipestill and some hydrotreating conversion capacity. But we're utilizing an existing gas plant and utility capacity and we're replacing over 100,000 barrels a day of intermediate products that purchased at Baytown and Baton Rouge. So this project is highly attractive. You're essentially getting a large-scale capacity addition for the unit cost of the debottleneck project. It's a very, very attractive project and significantly improves the Beaumont complex earnings outlook.

Okay. Moving on to Chemicals. In March, we spoke of 13 new Chemicals manufacturing facilities. And these are all underpinned by these competitive advantaged that we're talking about, integration, proprietary technology, performance products and global market access. Seven of the 13 are now operational, but the steam cracker at Baytown started up in early in the third quarter.

We are actively progressing projects to increase our Chemical product manufacturing capacity by 40%. So if I look forward, we have the Beaumont polyethylene expansion that should start-up middle of next year. We are progressing a new ethane cracker in Corpus Christi, and we've recently announced a plan to pursue a new liquids cracker in China. I'll explain on these in a later slide, but just want to leave you with a point that we're on track with our Chemicals growth plan.

So now for a couple of business updates, to start with the Antwerp delayed coker. This 50,000 barrel a day coker is now operational. And a point I want to make here is that, it is located at Antwerp, but I want to stress that it is a regional coker. In other words, we're planning to process resid from our entire European circuit at this coker. And you can see on the map that we're showing here that it's simply located in the manufacturing center of North West Europe. We can process third-party resids as well.

At the time of FID on this project back in 2014, it was not clear when the IMO bunker fuel spec change was going to come into effect, but the project was attractive based on just trend line the industry margins. And we knew the spec change provided throughout a potential upside. Of course, looking at the start-up timing today, it looks very likely we're going to achieve that upside -- the additional upside.

Once we achieve stable operations on the coker, we'll be looking for debottleneck opportunities, the further increase capacity in the unit and typically we're able to get of that another 10% or 15% more throughput over time. So this coker positions us well in Europe for the 2020 IMO spec change, but we're in good shape in the rest of world as well. With the most global coking capacity of any of the IOC's.

And we're also going to offer a marine gas oil and a low-sulfur fuel oil options for our customers. And, of course, we'll continue to offer a high-sulfur fuel oil product to the ship owners who have invested in onshore scrubbers.

Moving on to the Permian. We are positioned well in the Permian across the full value chain. It starts with the Upstream position, where we continue to see positive indicators on both the quality and the size of the resource in the Northern Delaware Basin acreage. You can see on the chart on the left that we're making good progress versus the growth potential communicated back in March. Our XTO Permian team is very excited with the results they are seeing out there in this new acreage, and the vectors clearly up on the Permian developments. I was out there about a month ago and, in fact, the entire management committee and the Board went out there, we even let, Neil, go out there with us. And the team -- it was clear to see that the team was very energized. They're really starting to hit their stride. It was really good to see that operation. Still early days. But, again, the vector is up there.

Today -- looking more Downstream, today, we have the ability to run 450,000 barrels a day of light crude in our Gulf Coast refining circuit, and this has provided ample incentive to secure efficient transportation capacity to our refineries well in excess of equity production from the Permian. Currently, we have about 270,000 barrels a day of committed capacity and that's likely going to grow further in the coming quarters. And the 450,000 barrels a day is growing too, in addition to the Beaumont expansion, we're working on some other smaller debottleneck projects to add about another 50,000 barrels to ultimately take our Gulf Coast light crude processing capacity to over 750,000 barrels a day. And then in addition to our three Gulf Coast integrated facilities, we run Permian crude at 10 other sites outside the US, including our Singapore crude cracker.

On the lower left of the chart, it's a chart from March showing the integrated earnings based on 2017 prices and margins. Year-to-date with the actual environment we're seeing, we've made well over $1.2 billion across this value chain. And it's clear from the current environment, highlighting the value of our approach in the Permian.

So last thing I'd like to say is that, given the growth plans we have in both the Upstream and the Downstream here, we're progressing a large 1 million barrel a day plus crude pipeline system with our JV partners. That's going to provide long-term efficient transportation to our Gulf Coast refineries and also other outlets. FID is planned for next year to start-up in 2021. We plan to be both an owner and an anchor shipper on the line.

Moving on to Western Canada, and our position across the full Western Canada crude value chain, it's somewhat similar to the Permian with strong Upstream and Downstream positions, facilitated development of a really valuable midstream logistics position that ensure we capture the full value of West Can crude, even when there's a large WTI, WCS differential. And just to clarify here, when I say we and our on this slide, I'm also including IOL, all the assets in Western Canada are fully or partially owned by IOL and they are, of course, operating everything up there.

Our Upstream position is comprised primarily of interest in Cold Lake, Syncrude and Kearl, and this production is processed at the Strathcona and Sarnia refineries in Canada. Our Midwest Joliet and Billings refineries and then all of our three large US Gulf Coast integrated facilities, and all of these with heavy oil processing capabilities.

During the early days of bringing Kearl on stream, we made the decision to invest in a 210,000 barrel a day capacity rail terminal in Edmonton and that's to allow efficient unit rail transportation to the Midwest and US Gulf Coast, in case Canadian production growth out-ramp pipeline capacity. As you can imagine, the utilization of this terminal is increasing rapidly in this current pipeline constrained environment, which provides another transportation option down to the Midwest and Gulf Coast refineries in addition to our committed pipeline capacity. Today, we're running about 100,000 barrels a day through this terminal, that should grow to about 170,000 barrels a day by the first quarter of next year. Our Downstream logistics positions in this value chain are unique, and like the Permian, added a significant earnings contribution in this quarter.

Moving to Chemicals. The chart on the left here were shown back in March and it shows the market position of over 75% of our Chemical product sales, where we are either number one or number two in the market. Our seven new facilities that are now online have added about five MTA of additional manufacturing capacity. And as shown in the red star from the chart, they are focused on many of the products, where we already have a leading market position. We continue to progress the new 1.8 MTA ethane steam cracker along with ethylene glycol and two polyethylene derivative units at a site near Corpus Christi, Texas. Construction of that project is pending completion of the environmental permitting process, and expected start-up is in 2022.

In September, we announced an agreement to pursue a liquids steam cracker complex in China's Guangdong province to produce performance polyolefin products for the domestic Chinese market. The current plan is the unit will have a direct crude cracking capability similar to our Singapore operation. And we're growing all these new facilities with a significant proportion of performance products, which currently are about 30% of our overall Chemical sales. They're growing at a rate about double that of the commodity chemical sales we're having, and they achieve, due to superior performance characteristics, on average about 30% higher price in commodity products.

So now, let me wrap up with showing you a few other highlights in our business that milestone since the end of the second quarter. In Brazil's fifth pre-salt bid round, we are the successful bidder on the TTF offshore block, adding up more than 71,000 net acres and bringing our offshore acreage build to about -- well not to about to, precisely, 26 blocks, two-thirds of which we're the operator.

In Guyana, we made our ninth offshore discovery and fourth year-to-date, the Hammerhead-1 well, and this discovery reinforces the potential of the Guyana basin. So as, I think, Neil highlighted last month, we've added a second exploration rig. In fact, I can verify that well is -- that rig is now spudded the Pluma exploration well. And we're also fast-tracking the Liza Phase 1 development, so the vector is certainly looking up in Guyana.

Our Permian tight liquids production growth continued, it's up 57% quarter-on-quarter, 2018 versus 2017. And we're currently running 38 rigs in the Delaware and Midland basins.

In Angola, the first Kaombo FPSO successfully started up in late July with production expected to reach 115,000 barrels a day, and the second FPSO is planned to start-up in mid-2019.

Now, moving to the Downstream, our Indonesia lubricants acquisition is proceeding well, transition with federal is on track. The expertise in motorcycle lubricants is complementing the mobile lubricants offer, and we think we're positioned well now to be a strong competitor in a growing market.

In Mexico, our fuels market entry is progressing well. Recently, we've been streaming new sites at the rate of three new retail stations per week. And in Germany, our retail divestment was completed on October 1, so we're moving to our branded wholesale model there. And the Augusta Refinery and Terminals divestment is on track for completion at year-end. So if the Augusta sale does close in the fourth quarter, we expect to combine earnings benefit in the Downstream on both the Germany and the Augusta divestments by about $700 million to $1 billion, with ForEx move is being one factor that could impact the final earnings.

And moving to Chemical, start-up has commenced at our Newport, Wales, Santoprene specialty elastomer expansion project, with the first production line now in service and the second line planned for start-up in next year.

And our Beaumont polyethylene plant expansion that I mentioned earlier, we'll take the remainder of the ethylene from the new Baytown cracker. It's not going to Mount Belvieu, and that's progressing well and the start-up is planned for mid-2019.

So before handing it back to Neil for some -- to start the Q&A, let me just wrap up by telling you that we are on track with our growth plans. We've seen a bit of upside in Guyana and in the Permian, and we've hit a couple of important milestones with Antwerp coker and the Baytown steam cracker start-ups. So I feel good about where our businesses are positioned today, and the underlying path we're on. We are all excited about the opportunities in front of us. And I can assure you the organization is working very hard on it.

So with that, I'll hand it back to Neil.

Neil Hansen -- Vice President of Investor Relations and Secretary

Great. Thank you for the comments, Jack. And I do appreciate you letting me go in that Permian trip, it was wonderful.

Jack Williams -- Senior Vice President

No problem.

Neil Hansen -- Vice President of Investor Relations and Secretary

Right. We'll now be more than happy to take any questions that you have.

Questions and Answers:

Operator

Thank you, Mr. Williams and Mr. Hansen. The question-and-answer session will be conducted electronically. (Operator Instructions) We request that you limit your questions to one initial with one follow-up so that we may take as many questions as possible. (Operator Instructions) We will first go to the line of Neil Mehta with Goldman Sachs.

Neil Mehta -- Goldman Sachs -- Analyst

Good morning, guys, and congrats on a good quarter here.

Neil Hansen -- Vice President of Investor Relations and Secretary

Hi, good morning, Neil. Thank you.

Jack Williams -- Senior Vice President

Good morning.

Neil Mehta -- Goldman Sachs -- Analyst

So, Jack and Neil, maybe you could start off by just talking about the LNG cadence of projects. You've got so many different options out there whether that is Mozambique, Golden Pass, the potential upside at PNG, Qatar. And I think we, as an investor community, are wondering, what are the priorities in terms of, most likely the sanction, when and how should we think about the cadence of that growth? So if you just frame out how you're thinking about it and where you stand with some of the key projects? That would be helpful.

Jack Williams -- Senior Vice President

Thanks, Neil. Let me start off, Neil, and you can chime in if you like. We are very happy with the portfolio of opportunities we have in the LNG market. We've -- in Papua New Guinea, we're building on success there with the Foundation project that's continuing to achieve performance above expectations.

Mozambique, a big new area for us, large resource base. We think we are bringing some real unique expertise that we have from both PNG and in Qatar to bring to bear on that resource. And then, of course, here in the US, continuing to look at Golden Pass with QP and, obviously, very interested in any expansions in the North Field as well. So, I would say that, given the low cost to supply of all these opportunities, they're all attractive. We see a growing LNG demand that would certainly allow all those projects to go forward. Naturally, the Mozambique is a little bit behind PNG in terms of the onshore trains, the offshore Coldwell may go a little quicker. But -- and, obviously, in Qatar, with the new trains, we would like to pursue that as soon as possible, but that maybe a little bit longer term as well.

So in terms of the cadence, what I'd tell you is that, there is other parties involved in all of those. We found them all attractive. We are wanting to pursue them all in our typical capital-efficient deliberate way. But very proud of where we are, and the opportunities we have in front of us, and we're excited about pursuing all of them, Neil.

Neil Mehta -- Goldman Sachs -- Analyst

That's great. The follow-up I had is, we've seen some increase in unconventional M&A, one of your peers doing a deal in the Lower 48, and then some of the independents as well here over the course of the last week. Just wanted your latest thoughts on pursuing growth in the Lower 48 whether to do it organically or to do it through transactions? And just what the bid/ask looks like in the market, especially with some of the shell players having a pull back here decently over the last couple of months?

Jack Williams -- Senior Vice President

Yeah, thanks, Neil. You mentioned it early in your question and let me just reinforce that, from an organic standpoint, we have a very exciting growth plan. We've talked about that earlier, lot of running room, we had that big acquisition in Northern Delaware Basin that we are now estimating over 5 billion barrels, 9 billion in total in the basin, so a lot to go after there.

Having said that, we do maintain the financial strength to be able to capitalize on any environment we find ourselves in that might present an attractive opportunity. And we continue to scan the market for all opportunities to play to our strengths. We think certainly unconventional does that. So we're continuing to look.

I would say that, as we think about those kinds of opportunities, we're certainly thinking about where we can really bring our development strengths, that's something that we'll have a large undeveloped aspect to it. But we do like our organic growth plan, we feel like that's going to give us a lot many years of substantial growth, and as you may have noticed, our rig counts has increased in the Permian and the vectors up there. And so, we got a lot to -- lot on our play right now, but we continue to look.

Neil Mehta -- Goldman Sachs -- Analyst

Thanks, Jack. Thanks, Neil.

Neil Hansen -- Vice President of Investor Relations and Secretary

Thank you, Neil.

Operator

Your next question comes from the line of Sam Margolin with Wolfe Research.

Sam Margolin -- Wolfe Research -- Analyst

Hey, good morning. Thanks for calling on me.

Neil Hansen -- Vice President of Investor Relations and Secretary

Good Morning, Sam.

Sam Margolin -- Wolfe Research -- Analyst

I guess, my first question, I'm going to relay a question that I've been encountering in the investment community and maybe you can have a better answer than I've been able to come up with. But one of the fears that gets brought up occasionally is that, fiscal terms internationally are sort of tightening, renewals are challenging, especially with momentum in commodity prices and people are afraid, there's a lot of contracts that are scattered around the world that are sort of at risk and that renewals aren't going to be as attractive.

Can you talk about how your unconventional business -- if that's true, first of all, if it's not, you can just refute it, but if your unconventional business kind of functions as an offset to that, you can simply rotate capital into the US where you're seeing those international headwinds and whether there is sort of a limit to that strategy. And just generally, if there is a strategic function to the US unconventional business besides just kind of short cycle volume growth at a high margin?

Jack Williams -- Senior Vice President

Okay, Sam. Let me start with that and Neil, you may want to chime in. But on the last part of the question, first around the unconventional, I mean, we do see it more than just kind of short cycle place to go invest. We do view the whole unconventional strategically and really plays to our strength with a large unconventional organization that we have. So, I would certainly characterize the US unconventional as strategic and as a strength of our corporation.

Now, getting back to the earlier part of your question around PSC extensions and terms and so forth. What I would say is that, by the time PSC extensions come up we typically had 20, 25, 30 years of operations, and we would hope -- certainly, our expectation and we would hope that the resource owner recognizes the strengths that we bring at that point in time, and that we are able to progress and to extend the resources are required, extend those terms, obviously, with a fulsome negotiation. So I wouldn't want to pre-talk about where those things are going to go and when. But I would think we typically start out with a position -- start out from a position of strength in terms of what we've delivered in terms of the value to the resource and that certainly comes into play in terms of those types of decisions.

The other thing I'd like to point out is, in terms of this overall comment you made around physical starting to tight and so forth is, when we talk about these five growth areas that we talked about at back in March, think about when those were acquired and brought into our portfolio and the environment at that time. So, we basically brought all of those in kind of at the bottom of the cycle where we had some -- where the environment was reasonable in terms of getting reasonable terms and so forth. And all of those were tested hard at bottom of the cycle conditions. So, to the extent if you think things are tightening now it makes those resources and those projects all the more attractive.

Neil, do you have anything to add?

Neil Hansen -- Vice President of Investor Relations and Secretary

Yeah. The only other thing I maybe just to reiterate some of those points, Jack. We have a long history of execution. We have a good relationship with the resource owners where we tend to be a partner of choice. The diverse portfolio that Jack mentioned does give us that flexibility, Permian certainly being an example of that.

The other thing I'd say is, we've successfully renegotiated multiple extensions across our portfolio in the past. So, I don't think there is any near-term pending concerns on fiscals. I think we continue to focus on making sure we deliver what we say we're going to deliver that we've established those good relationships and that certainly mitigates any other risk you might have from deteriorating fiscals.

Sam Margolin -- Wolfe Research -- Analyst

Thanks for all that color. And my follow-up is quicker just on this theme of integration. There's, obviously, a lot of focus on crude takeaway from the Permian and maybe from Western Canada too, but frac has been very tight in the Gulf Coast and you sort of highlighted with your Chemicals summary of the period. But just how you think about the full suite of integration besides just takeaway and refining, but maybe some of those intermediate stages too if you have investment plans for that?

Jack Williams -- Senior Vice President

Well, we make a comment there is, on the broader question of the takeaway capacities in these disconnects. The nice thing about being across the value chain is it doesn't really matter whether those disconnects are there or not in terms of value we accrue to the corporation. Well, for instance, in the Permian, we'll either accrue that value with higher crude price at the wellhead or we'll accrue that value through our midstream and downstream, but we'll get that full value of those molecules all the way through the value chain to the customer. And really I think the same thing is true in Western Canada.

Now, on the ethane issue and the NGL fractionation capacity, what I'd tell you on that is that, that's a transitory issue and there is more NGL fractionation capacity being built -- constructed right now. We certainly see that going away. We see plenty of ethane supply out there and quite frankly, a lot of us getting rejected into the methane stream right now. So, that's going to get resolved, and I think it's going to get resolved in a matter of over the span of 2019. But I'd say, that's more of a transitory sort of issue.

Neil, anything to add?

Neil Hansen -- Vice President of Investor Relations and Secretary

Yeah. I'd just reiterate, long-term fundamentals for the Chemical business remain very strong. We look at demand over time still growing at 1% above GDP. You'll see times where you'll see cyclical pressures. We don't try to attempt to time when we bring these investments online. We make these investments based on those long-term fundamentals.

Sam Margolin -- Wolfe Research -- Analyst

Thanks so much.

Neil Hansen -- Vice President of Investor Relations and Secretary

Okay. Thank you.

Operator

The next question comes from Phil Gresh with J.P. Morgan.

Phil Gresh -- J.P. Morgan -- Analyst

Hey, good morning. First area I wanted to just hit was on the Chemicals business, Jack. I know there were some headwinds there from maintenance in the third quarter, but we have seen some pressure for much of the year on the earnings profile in the business and that's a big area of investment for you guys. So, maybe you can just elaborate a bit more on your thoughts here and just in terms of the margin outlook for the various businesses?

Jack Williams -- Senior Vice President

Sure. Neil just mentioned, we do see a longer term growing demand, the fundamentals of business still look good. The issues have kind of shifted a bit in the year. The early part of the year we had depressed on aromatics margins and those look much better now, and now with the US ethane feedstock increases, it hurts the ethylene and polyethylene margins. So, there is a few kind of near-term things going on, but it doesn't change the fundamental analysis for those -- supporting those big investments. We still see a growing market. We think our investments are all advantaged in terms of cost of supply. We had these performance products that are unique to us that also enhanced our projects as we bring them online. So, as we look at the fundamentals, we really still like that business a lot and like the investments that we had made and are making.

Phil Gresh -- J.P. Morgan -- Analyst

Okay. The second question, just a quick numerical one would be, you had mentioned the two asset sales in Downstream and the earnings impact that you expect to see. What is the last earnings impacts from both of those assets on a go-forward basis? Because that's -- you guys have a lot of asset sales, and I think that's the harder part for us to figure out sometimes.

Neil Hansen -- Vice President of Investor Relations and Secretary

Boy, I'm not sure what the last value is going forward. Obviously, when we look at a divesting asset and we do that when someone else sees more value for the assets than we do. And so, again, the assumption is, when we sell these divestments, we're getting more value out of them than we would if we were to keep them, but I don't have a specific number on those two individual assets and what we're giving up. But I can assure you that we're getting today is worth more than what we would get if we were to keep them.

Jack Williams -- Senior Vice President

Yeah. I was (multiple speakers) Yeah.

Phil Gresh -- J.P. Morgan -- Analyst

Okay, thanks. If I could just ask one last one, then on the cash flows. The headwind from deferred taxes and I think in the first quarter, you had a big headwind from affiliates that you expected to reverse at some point. Maybe you could just elaborate a little bit on where we would stand on that? Thanks.

Neil Hansen -- Vice President of Investor Relations and Secretary

Yeah, you're right. In the quarter, we did see an adjustment for the non-cash impacts from those favorable one-time tax items that I mentioned. If you look full year, we will always see some timing on equity companies in terms of earnings and when the dividends come in. It's tough to predict when that will happen. I think we mentioned in the first quarter that that was the case. And we have seen dividends coming from equity companies.

I think another important thing to consider is, these equity companies also may prioritize accretive investments over dividends. And so, I think one of the things you're seeing and probably the biggest impact on a year-to-date basis is TCO. So TCO is the equity company that holds our Tengiz investment. And so, obviously, they're prioritizing dividends, over-investing in that project. So, tough to predict exactly when the dividends come in, there will always be some timing impacts. But again, we've seen some cash come in, but we're certainly supportive of those companies continuing with investments that will provide value to the shareholders.

Phil Gresh -- J.P. Morgan -- Analyst

Okay. Thank you.

Neil Hansen -- Vice President of Investor Relations and Secretary

Good. Thank you.

Operator

And next we'll go to Doug Leggate with Bank of America Merrill Lynch.

Doug Leggate -- Bank of America Merrill Lynch -- Analyst

Hi, good morning, everybody.

Neil Hansen -- Vice President of Investor Relations and Secretary

Hey, Doug.

Jack Williams -- Senior Vice President

Good morning.

Doug Leggate -- Bank of America Merrill Lynch -- Analyst

Jack and Neil, I wonder if I could pick up, Jack, on one of your comments about fast-tracking Liza-1. I think originally -- actually just a broader question on Guyana generally. The Hammerhead, my understanding from your partners could potentially also be fast-track in addition to Liza-1. So I'm wondering if you can address, where you see the guidance that you laid out for Guyana, your strategy update versus what appears to have been fairly rapid progress in the last six months?

Jack Williams -- Senior Vice President

Yeah. On Hammerhead, the rig just moved off there. We did some -- in addition to the drilling well, we did some dynamic flow testing and so forth. So, a little bit too early to provide any EOR estimates on that one. So, I think that leaves us at this estimate that's out there right now over 4 billion oil equivalent barrels up to five FPSOs peaking at 750,000 barrels a day. With Liza-1 targeting early 2020 and Liza-2 coming in behind that, we're talking to government right now about our development plan, and environmental permit and hope to start that one up in 2022 or behind that. So, we're continuing to take on a long, but when you look at the time between discovery in this projection there's a lots of one start-up. It's very impressive in terms of what the industry timelines typically look like.

Doug Leggate -- Bank of America Merrill Lynch -- Analyst

Sorry, Jack, just to be clear, you did say fast-track. So has the March 2020 did change for Liza-1?

Jack Williams -- Senior Vice President

No, and I don't think we ever said March. We just said early 2020.

Doug Leggate -- Bank of America Merrill Lynch -- Analyst

Okay.

Jack Williams -- Senior Vice President

When you go from five years from discovery to online, obviously, that's fast-track. I mean, that is very fast movement, that's about as good as it gets in industry. So that was what we call as fast-track.

Doug Leggate -- Bank of America Merrill Lynch -- Analyst

My follow-up guys, if I may, is also on the, I guess, an Upstream question. Just going to the Permian, 38 rigs Q1 -- Q2 sorry, you gave us the completion cadence you said you brought 50 wells online in Q2. Can you tell me what the -- how that completion cadence looked in Q3 and what the -- whether you've caught up now with your rig activity because obviously it was still pretty light on the completion pace? And I'll leave it there. Thank you.

Jack Williams -- Senior Vice President

Yeah. And no need to apologies, I don't mind talking Upstream and I don't mind talking Permian at all. I, in fact, enjoy talking Permian. Yeah. On the -- let me answer your question directly, and then I'll explain it a bit. We brought on 58 wells in the Midland Basin and only eight in the Delaware Basin in the third quarter. And you'll notice the rigs are about equal between the two basins. And what you're seeing is that, in the Midland Basin, there is a lot more infrastructure. We had the rigs there longer. And so, the timing just worked out to where we have a lot more wells coming online there in the Delaware Basin. Over time, some of that's going to switch over -- some of that growth going to switch over to Delaware Basin, but it's just less mature.

I think it points out the issues that I think Neil Chapman said a couple times and I've said it as well. It's going to be fairly lumpy coming on. I mean, we are basically doing three things, our teams out in the Permian are doing three things simultaneously. First, we are delineating this big new acreage position we have and like I said that everybody is -- if that looks very promising, there is further upward vector on that resource. We already increased it from 3 billion to 5 billion barrels and there is further upward tailwinds on that.

We're building out infrastructure in Delaware Basin. We're spending a lot of time and energy on this infrastructure build out. There is about 200,000 barrels a day of well pad facilities under construction right now in addition to two major central processing facilities. So, because, we had essentially blank canvas on this 225,000 acres there was not a lot of facilities out there. So we're building all that from scratch, which in some respects is an advantage for us because it allows us to bring other parts of our corporation, this major project expertise to bear on this. And we're going to wind up with an infrastructure there that's really unlike anything else in the Delaware Basin or in the Midland Basin for that matter or any other unconventional development that I've ever seen. It's going be very capital efficient and allow us long-term to have a very competitively advantaged operation.

So, in addition to those two things, we're also growing production. So there are also having some of the rigs dedicated to just developing where we know we have mature winches. And we feel like we know it pretty well and we're just growing production, but there's all those things going on at once. So it's going to be pretty lumpy. We draw a nice smooth lines, but it's going to be pretty lumpy as we go up there, but as evidenced by this quarter. And I think --

Doug Leggate -- Bank of America Merrill Lynch -- Analyst

May I ask for a point of clarification real quick. I know it's going to jump off here. But, Neil, that promise a little bit more of a look forward on some of your commentary. If you 50 in Q2, 58 in Q3, can you give some idea as to what that was going to look like in Q4 in your current plan?

Jack Williams -- Senior Vice President

No, I can't. I really don't know. I mean, I can just tell you that the rig activity we have out there -- now, I will say one thing, a lot of those rigs have been picked up in the last three, four, five months. And when you think about these multi-well pads and that you drill four, five, six wells at a time and then have to come back and frac all those wells, all the facilities considerations and so forth. It's seven, eight, nine months between picking up a rig and having production online. So, it's coming, the activities there, we're liking what we see, but I can't give you a number for fourth quarter.

Doug Leggate -- Bank of America Merrill Lynch -- Analyst

Appreciate the answers, guys. Thank you.

Neil Hansen -- Vice President of Investor Relations and Secretary

Thanks, Doug.

Operator

And next we'll go to Thomas Klein with the Royal Bank of Canada.

Thomas Klein -- Royal Bank of Canada -- Analyst

Thank you for taking my question. With a good quarter and strong cash generation. I'm just wondering what else you guys would need to see quality, price or in terms of the environment to prompt share buybacks and especially in light of recent rhetoric on this from peers? Thank you.

Neil Hansen -- Vice President of Investor Relations and Secretary

Great. Thanks you, Thomas. Yeah. We did have really what was an excellent quarter from a cash generation perspective, we're very pleased with it. I think nothing's changed for us in terms of our capital allocation strategy and we are in a very fortunate position to have a really impressive portfolio of attractive accretive projects. And we're going to prioritize investing in those, and we've talked about, in fact, it -- in the Upstream, we're going to generate a 20% return and a 15% to 20% return in Downstream and Chemicals. So that's certainly a priority. We want to continue to pay a reliable growing dividend. I think we've paid a growing dividend for 36 years now. And we recognize that those two things are tied together. We need to continue to invest in accretive projects, so we can continue to pay a reliable growing dividend.

Now, beyond that, and then, you've seen a little bit of it this year we want to ensure that we have the financial capability, the financial strength that we need to take advantage of investment opportunities regardless of the price cycle. And to the extent, we can meet that those objectives, and there is excess cash, we will certainly distribute cash back to shareholders. It's an important part of our capital allocation strategy. I think we've distributed more than $220 billion since the Exxon and Mobil merger. So it's certainly a key factor in that.

I think if you look at it maybe bigger picture what we're trying to do was, we're trying to position the Company for long-term sustainable distribution to our shareholders. I mean, that's the objective. And we think the best way to do that is to ensure that we are taking advantage of, again, a portfolio of opportunities that probably as attractive, if not, more attractive than anything we've seen since the Exxon and Mobil merger. So we're not going to prioritize buybacks that we're doing that because what we're really focused on is long-term sustainable distributions.

Anything to add to that, Jack?

Jack Williams -- Senior Vice President

I would just say that the shareholder accretion from this investment program we have is, we think is going to be very impressive. So, I'd just echo that point that we have a very exciting investment portfolio in front of us.

Thomas Klein -- Royal Bank of Canada -- Analyst

Understood. Thank you.

Neil Hansen -- Vice President of Investor Relations and Secretary

Okay. Thank you.

Operator

Okay. Your next question comes from the line of Jason Gammel with Jefferies.

Jason Gammel -- Jefferies -- Analyst

Thank you very much, gentlemen. I appreciate the conversation around the coker Antwerp. I was hoping you might be able to make similar comments about the Rotterdam hydrocracker. First of all, just the size of the unit and whether you would actually be also processing your European system and potential third-party VGO through that unit? And finally, whether you have the hydrotreating capacity there to be able to handle third-party high-sulfur VGO?

Jack Williams -- Senior Vice President

Let's say, I think it's primarily handling the feeds from our refinery there in Rotterdam. But let me just kind of give you a sense, again, this is advanced technology, advanced hydrocracker, proprietary technology and we think we're going to generate not only about 20 kbd of high-quality Group II lubes, but also some clean distillate products as well.

And due to what we already had on the ground in Rotterdam, and this shift to a kind of a real lube basestocks generating machine, this is going to have substantial impact on the Rotterdam refinery profitability. And we talked about and Neil talked about some weakness in near-term in the basestocks market and clearly that's coming because we're adding a bunch of Group II capacity, which long-term is going to be very advantaged. So, I don't know what we're going to be looking at when it first come on in early '19. But it's fundamentally a very advantaged investment, one of the best returns we have doubles the earnings from Rotterdam. And I think, again, I think it's primarily focused on, I think, most of the feeds into this unit are at the refinery today.

Jason Gammel -- Jefferies -- Analyst

Okay. Thank you for that. And I was just hoping that you might be able to give us where you're at in the process for that second group of three expansion projects in the Downstream. Have they all restepped (ph) idea, or they in construction, just where they are at in the process?

Jack Williams -- Senior Vice President

Yeah. We're looking to FID, Beaumont probably first quarter of next year. The follow unit is going to be about the same timing as Beaumont, probably more like mid-year working for an FID on that one. Singapore is a little bit behind that, we're looking more like a 2023 or so start-up in Singapore. It's a bigger project. It's a very, very large project in Singapore, very fundamentally shift the whole Singapore, when you take 75 kbd of resid and turn that into a lot of lubes and clean products that's a very large project. That one is a little bit later. But Beaumont, we've been looking at all opportunities to accelerate that and trying to get that on as soon as possible because we see that is extremely attractive.

Jason Gammel -- Jefferies -- Analyst

Thanks very much.

Operator

And your next question comes from the line of Paul Cheng with Barclays.

Paul Cheng -- Barclays -- Analyst

Hey, guys. Good morning.

Jack Williams -- Senior Vice President

Good morning, Paul.

Paul Cheng -- Barclays -- Analyst

Jack, just on the Beaumont crude unit 200,000 barrel per day. Can you share a little bit more detail in terms of how the -- you're talking about that repacing maybe a 100,000 barrel per day of the feed. So how is the output is going to look like at the end, how that is going to change? And what kind of CapEx that we may be talking about and when that is supposed to come on stream?

Jack Williams -- Senior Vice President

Yeah. We're looking at 2022, maybe perhaps 2021 still looking at that pretty hard in terms of when it's going to come on stream. What we're looking at doing is a new atmospheric pipestill. 250,000 barrels a day coming in, we'll take the middle of that tower, hydrotreated they are onsite and get some diesel fuel is coming out of Beaumont. So Beaumont will net increase diesel coming out of the refinery. And then the bottom and the top of the tower are going to be intermediate products to Baytown and to the Baton Rouge. Again, replacing products that they are buying today. So, not a lot of net increase in new product coming out of those, it's just lower cost. And again, given the advantage 30% less than industry cost because of all these advantages that utilizing existing infrastructure I talked about, and well in excess of the 20% return project.

Paul Cheng -- Barclays -- Analyst

Jack, should we assume that the diesel or distillate increase in Beaumont someway in the 30,000 to 50,000 barrels per day based on what you described?

Jack Williams -- Senior Vice President

Probably higher.

Paul Cheng -- Barclays -- Analyst

Higher than that?

Jack Williams -- Senior Vice President

Yeah. Probably like 60,000.

60,000?

I mean, ballpark. I don't have the note in front of me, but it's something like that.

Paul Cheng -- Barclays -- Analyst

Sure. Would that be all in ULSD or that it would be a combination?

Jack Williams -- Senior Vice President

It'll all be ultra-low sulfur diesel that will be coming out, clearly. And, yeah.

Paul Cheng -- Barclays -- Analyst

I see. And that in terms of the other, say, debottleneck opportunity, 150,000 barrel per day expansion. What kind of timeline we may be talking about?

Jack Williams -- Senior Vice President

Which bottleneck (ph) is that?

Neil Hansen -- Vice President of Investor Relations and Secretary

Paul, I assume you're talking about the debottlenecks at the other facilities. So, they came down (multiple speakers).

Paul Cheng -- Barclays -- Analyst

That's correct sorry.

Jack Williams -- Senior Vice President

It was not a 150,000, Paul, it was just 50,000.

Paul Cheng -- Barclays -- Analyst

It's 50,000.

Jack Williams -- Senior Vice President

We have 450,000 capacity today. In Beaumont would be another 250,000, another 50,000 on top of that and in over 750,000. I'm rounding the numbers here, but over 750,000 barrels a day after Beaumont and these other attractive development projects.

Paul Cheng -- Barclays -- Analyst

Okay. A final short one, Neil, I think earlier that you said that, you will be on track to the $24 billion CapEx, if we exclude $1 billion you spent in Brazil recently. So is that means that we are going to be roughly, say, $25 billion for the year?

Neil Hansen -- Vice President of Investor Relations and Secretary

Yeah. Paul, our -- it's again subject to what happens in the fourth quarter. But our current outlook is for the full year is $25 billion. What we've seen throughout the year, fortunately is some incremental opportunities to acquire additional acreage in Brazil and that's roughly about $1 billion above, what we thought we were going to get. And so, that's where you get to the $25 billion. Again, that's heavily dependent on what happens in the fourth quarter.

Paul Cheng -- Barclays -- Analyst

Sure. Thank you.

Neil Hansen -- Vice President of Investor Relations and Secretary

You're welcome, Paul. Thank you.

Operator

Next we'll go to Alastair Syme with Citi.

Alastair Syme -- Citi -- Analyst

Thanks for taking my questions. In the Analyst Day, Jack, you put out earnings expectations shots on both the Downstream and Chemicals. And I know they were long-term but there were also numbers for 2018 and 2019. And just sort of where you're run rating well behind these both for 2018 and sort of the expected 2019 performance in both Downstream and Chemicals. Can you sort of help us with how much of this is macro and how much of this is unplanned downtime?

Jack Williams -- Senior Vice President

Yeah. Alastair, let me just say this. The market environment is very different than what we have had. We assume 2017 flat conditions and in the Chemicals business, it's very different -- actually in Chemicals and Downstream both, very different margin environment. But the underlying activity that we talked about on those projections is on track. That's why we're saying these milestones of these projects starting up. So the underlying activity that's driving these earnings results that were these earnings projections -- earnings potential projections that we talked about in March are all there. As a matter of fact, again, I think we're seeing a bit of upside.

So, I don't know -- in terms of -- can't give you any definite numbers in terms of earnings and sales, but I can tell you the activity is going well.

Alastair Syme -- Citi -- Analyst

So you'd say it's more than macro then. Okay. And a follow-up, can you just talk around IMO in particular if you see scope for emergence of compliant blends, particularly in the Asian region?

Jack Williams -- Senior Vice President

I don't know if I can answer that question specifically, but I can just tell you that we're supportive of the timing. We think that initially we'll be able to adapt. We think it's the right thing to do in terms of going from 3.5% sulfur down to 0.5%, and we are going to be ready. And we're going be ready with a bunch of different options. So as I mentioned, we'll still have HSFO, we'll have a low-sulfur fuel oil as well. We'll have a marine gas oil and we'll have LNG, to the extent that some ships convert to LNG we'll have that as well. And then also, we have a lot of coking capacity that will be churning out some -- destroying that to a churning -- destroying that resid and churning out some high-quality distillate. So, I think we're going to be ready and we're looking forward to that environment.

So I can't really tell you anything specific about where others are doing or where the markets are doing. I mean, hard to see how that -- what the impacts are going to be in that overall. Obviously, the clean dirty spreads going to grow, and we don't know how much and don't know have for how long. So, I think the industry is going to deal with it just fine.

Alastair Syme -- Citi -- Analyst

Thank you.

Operator

Next we'll go to Roger Read with Wells Fargo.

Roger Read -- Wells Fargo -- Analyst

Yeah, thank you. Good morning.

Neil Hansen -- Vice President of Investor Relations and Secretary

Hey, Roger.

Jack Williams -- Senior Vice President

Good morning.

Roger Read -- Wells Fargo -- Analyst

I guess, the question earlier was asked about buying things or whatever and you had detailed in the fourth quarter some of the asset sales coming through on the Downstream side. I was wondering in a market where oil prices have recovered, you clearly are focused on the investment side, but everything has to compete for capital. Do you see any acceleration potential and dispositions over the next couple of years and particularly as the Upstream starts to transition with a greater component from the Lower 48, if that makes it an easier decision to move forward on asset sales?

Jack Williams -- Senior Vice President

Yeah. Let me -- we kind of hinted at this talked and talked about a little bit back in March and certainly in dialogue. I think we've all been having we've been saying that we are going to be more active in terms of looking at our Upstream assets. And as we bring on -- as you mentioned, as we bring on all these high-quality assets and invest in these new accretive volumes, clearly, we need to be looking at the other end of the portfolio and what might be worth more to somebody else than it is to us, given where our portfolio is heading. So we are already more active and we'll continue to be more active in that area.

What I can't give you any specifics right now in terms of the timing or the terms of how those transactions and when those transaction may happen. Obviously, we need to have an active buyer as well as the seller. But we have had some -- if you think about what we've announced year-to-date with the Norway divestment that was last year and then Scarborough and then Rockies Gas. So we have been active in that and that activity is going to continue to ramp-up.

Roger Read -- Wells Fargo -- Analyst

Thanks for that, Jack, and I appreciate the greater disclosure Exxon is giving, but I didn't really expect you to give me a list of projects that you were going to be unloading here. As a follow-up -- sorry, just as a quick follow-up, the question about share repos was asked, but I was wondering since you mentioned debt had declined to $40 billion lowest since '15. I was just curious, is there a debt goal, debt to cap, net debt, total debt number, recapturing the top credit rating any of that kind of drivers that we should think about in terms of where debt goes down the road?

Neil Hansen -- Vice President of Investor Relations and Secretary

Yeah. This is Neil, Roger. I'll take that one. We don't target a specific credit rating. We don't target a specific debt level. Again, I think the aim or the goal is to ensure that we maintain financial strength, financial capacity so that we can act counter cyclically, we can take advantage of investment opportunities regardless of the price cycle, but aiming or putting specific target out there, we don't typically do that. But again, we already have a very, as you know, we have industry-leading strengthen on the balance sheet and then we want to maintain that so we can take advantage of opportunities, but we don't target any specific debt level or credit rating.

Roger Read -- Wells Fargo -- Analyst

Okay. Thank you.

Neil Hansen -- Vice President of Investor Relations and Secretary

It is a competitive advantage, Roger. I mean, you imagine, it gives us a lot of capacity to use our balance sheet when we see accretive opportunities.

Roger Read -- Wells Fargo -- Analyst

All right. Thanks.

Neil Hansen -- Vice President of Investor Relations and Secretary

Yeah. Thank you, Roger.

Operator

Our next question comes from the line of Rob West with Redburn.

Robert West -- Redburn -- Analyst

Hi, thank you for taking my question. I'd like to ask the first one about the comments you made earlier around your Downstream investments. And the question is, are you surprised how little some of your peers are investing in new either capacity or complexity that refining base? And could you just make some comments about why you think that might be, if it is a trend that you are seeing?

Jack Williams -- Senior Vice President

Yeah. I would just say, mildly, yes, surprised, but I don't really know why. I mean, I think that's something you had to ask them. One thing I would like to say, though is, as we think about refining investments, we're really not interested in kind of plain vanilla industry standard refining at industry-standard unit that conversion capacity that kind of thing. We're bringing proprietary technology and/or footprint advantages on all those projects we had. So they are all well in excess of what others might see on their potential refining investments. And I think that probably differentiates us. In addition to that, you look at some of the differentiated products we have coming out as well. So, I think that may be a reason why.

Robert West -- Redburn -- Analyst

Okay. Thank you. The second one would be on digital and really the question is, what is your number one highlight in the digital space in the last 12 months? And the context for asking is that, I've seen one of your peers talk about having 20 million data points a day at a New Gulf of Mexico platform and I've seen one of your other peers just find a big new agreement with a machine learning company. Is there something you'd point to in that space or would you say it less active than peers there?

Jack Williams -- Senior Vice President

Well, let me -- Neil, why don't you run away on this one too, but let me just make a comment. I can assure you we are very active in this space. We have had a lot of discussions at the management committee level around all the things we're doing in digital. We are not rushing out to do a me-too type project in digital, but we are putting in the underlying infrastructure to give us advanced analytic capabilities. We are doing things like pervasive WiFi in our facilities to where we can make our operators much more productive. We have real-time data feeding in from all our major piece of equipment is improving the reliability.

So we are -- we don't -- you're right, we haven't talked about as much as some of our competitors, but we are very active in this space. All aspects of our business have big digital organizations in them looking at all that opportunity and that's coordinated with the central IT organization that's looking at the overall strategy. So, very active and we are seeing some bottom line benefits for sure.

Neil Hansen -- Vice President of Investor Relations and Secretary

And maybe one example I can give. You look at what we're doing on the sub-surface and you can imagine over time how much seismic data we've collected as a Company. And so, one of the areas we're looking at is digitizing that and again, with the idea of using artificial intelligence and Big Data to help us continue to look for resource. So that's one specific example. But again, I think it's happening across the business.

Robert West -- Redburn -- Analyst

Thank you for this perspective.

Jack Williams -- Senior Vice President

Good. Thank you, Rob. I think we have time for one more question.

Operator

Okay. We'll take our last question from Jason Gabelman with Cowen.

Jason Gabelman -- Cowen and Company -- Analyst

Hey, guys, and thanks for squeezing me in at the end of the call. Firstly, just on --

Neil Hansen -- Vice President of Investor Relations and Secretary

Yeah. Good morning, Jason.

Jason Gabelman -- Cowen and Company -- Analyst

Yeah, good morning. Just on the Brazil acreage footprint expanding here. Can you first remind us of that $1 billion, how much has been spent year-to-date?

And secondly on that, there haven't really been many updates on the Carcara development. Can you give us any updates that you have or how you're thinking about this project coming along, given not much coming from you or your partners in that project?

Jack Williams -- Senior Vice President

Let me handle the last part of the question and maybe Neil could chime in on the numerics on the investments this year. On Carcara, we're working with Equinor on that as they're operating that development. And again, we see that as a recoverable resource of more than 2 billion barrels of high-quality oil. We've had another on Block discovery that could increase that further. So it's looking good. Continuing to progress. We're still talking -- continuing to talk about what's the optimum development plan and timing on that, but we see it as very attractive. I think we both absolutely agree, it's very attractive. And we see that as kind of being a 2023, 2024 type start-up depending on a number of factors on the permits and when we get going there.

But one thing I'd like to mention is that, I talked about 26 blocks in Brazil. And all of these are blocks we went after because we saw on seismic some attractive features that we wanted to look at a lot harder. The only thing we had in our outlook from Brazil that's been included in those earnings projection outlook we talked about back in March is just the one Carcara. Everything else in Brazil is complete upside to the outlook we had. And we do see it as very, very perspective. We're very excited about the program.

Now, we're probably going to spend the rest of this year and next year acquiring additional 3D seismic, interpreting that, maybe 2024 out there drilling new exploration wells, but we see it in their perspective and we're very excited about the opportunities there.

Neil Hansen -- Vice President of Investor Relations and Secretary

Okay. Maybe I can give you a little perspective on year-to-date. So, again, with the acquisition of the Teton (ph) block, which was roughly 71,000 acres, we're now up to 2.3 million net. I think year-to-date approximate numbers will be, I think, full year would be around $2 billion, which is again about $1 billion above what we had in plan. And Jack mentioned, the 26 blocks that we're in, I think the other thing that's attractive is, we operate approximately 66% of those blocks and then most of them are under concession contracts as well. So a very attractive position.

Jason Gabelman -- Cowen and Company -- Analyst

All right. Great. Thanks a lot.

Neil Hansen -- Vice President of Investor Relations and Secretary

Great. Thank you, Jason. And thank you for your time and thoughtful questions this morning. We appreciate you allowing us the opportunity to highlight our third quarter that included strong earnings and cash flow performance supported by improved operations and significant liquids growth.

I'd also like to remind you that our Chairman and CEO, Darren Woods will participate in our fourth quarter and full-year earnings review. We appreciate your continued interest and hope you enjoy the rest of your day. Thank you.

Operator

And that does conclude today's conference. We thank, everyone, again for their participation.

Duration: 84 minutes

Call participants:

Neil Hansen -- Vice President of Investor Relations and Secretary

Jack Williams -- Senior Vice President

Neil Mehta -- Goldman Sachs -- Analyst

Sam Margolin -- Wolfe Research -- Analyst

Phil Gresh -- J.P. Morgan -- Analyst

Doug Leggate -- Bank of America Merrill Lynch -- Analyst

Thomas Klein -- Royal Bank of Canada -- Analyst

Jason Gammel -- Jefferies -- Analyst

Paul Cheng -- Barclays -- Analyst

Alastair Syme -- Citi -- Analyst

Roger Read -- Wells Fargo -- Analyst

Robert West -- Redburn -- Analyst

Jason Gabelman -- Cowen and Company -- Analyst

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