Last year at this time, ExxonMobil (NYSE:XOM) unveiled a bold plan to double its earnings and cash flow from 2017's baseline by 2025. One of the key fuels of that plan was the company's sizable position in the Delaware Basin side of the Permian, where it spent billions of dollars to expand in recent years, including paying $5.6 billion to buy Bass in 2017.

However, Exxon's successful efforts over the past year in both drilling new wells and locking up long-term transportation for its oil and gas production have enabled the oil giant to increase its outlook for the Permian. The company now sees that region pumping out more than 1 million barrels of oil equivalent per day (BOE/D) by 2024, which is an 80% increase from last year's forecast. That faster growth in the Permian, when combined with Exxon's successes elsewhere, now leads the oil company to believe it can grow earnings 140% by 2025 from 2017's level.

An oil pump with the sun setting the the background.

Image source: Getty Images.

The Permian keeps getting bigger

When Exxon bought Bass in 2017, it added an estimated 3.4 billion BOE of resource potential, which more than doubled the oil giant's total in the region to 6 billion BOE. The company has since increased that number up to more than 10 billion BOE, driven mainly by continued testing, which has increased its understanding of the resource. That number will likely keep growing as Exxon adds and upgrades its acreage position as well as gains more knowledge on how best to develop this resource.

This significant increase in resource potential leads Exxon to believe it can now grow its production in the region at a faster pace over the next few years. The company initially thought it could increase its output up to around 600,000 BOE/D by 2025, but it now anticipates producing more than 1 million BOE/D by 2024. There's ample upside to that forecast, as Exxon continues to test the best way to develop its acreage as well as the potential for it to bolster its position through additional acreage acquisitions. 

A pipeline and an oil pump at sunset.

Image source: Getty Images.

Securing a pathway for its production

Another factor driving Exxon's view that it can grow at a faster pace in the future is that the company has locked up capacity on several new pipelines. This strategy not only eliminates the risk of future infrastructure bottlenecks slowing it down but will enable the company to maximize the value of its production by feeding it into its expanding downstream operations along the U.S. Gulf Coast.

Exxon did this by agreeing to be an anchor shipper on Kinder Morgan's (NYSE:KMI) Permian Highway Pipeline, which will move natural gas from the Permian to the Gulf Coast. That sizable commitment helped quickly push that pipeline through the development phase. As a result, Kinder Morgan and its partners are on track to complete this pipeline by the end of next year.

Exxon is also working with Summit Midstream Partners (NYSE:SMLP) on the development of the Double E pipeline, which is a regional gas pipeline in the Permian. Exxon not only signed up to be a major shipper on Double E but has the option to acquire a 50% interest in the project. That equity stake means Exxon could help fund as much as half of the construction costs, which would ease the financial burden on the cash-strapped Summit Midstream. While Summit Midstream has yet to sanction the project, the company believes it will soon have enough shippers to move forward, which puts it on track to have the pipeline in service by the second quarter of 2021.

Finally, ExxonMobil is working with Plains All American Pipeline (NYSE:PAA) to develop a large-scale oil pipeline out of the Permian. Exxon, Plains All American, and another partner recently agreed to move forward with construction on the Wink-to-Webster pipeline, which would transport 1 million barrels of oil per day from the Permian to refineries and export terminals along the Gulf Coast when it comes online in the first half of 2021. However, the companies are in discussions with the developers of a rival project to combine them into one large-scale pipeline, which is currently on track to start up by the middle of next year.

A Permian-fueled future

ExxonMobil sees even bigger growth out of the Permian over the next couple of years after its continued evaluation of the region revealed that it's sitting on much more oil than initially thought. Add that to its foresight to work with pipeline developers to help them push forward with much-needed projects, and the company won't need to worry about infrastructure constraints slowing it down in the future. As a result, Exxon now expects to generate an even bigger gusher of earnings growth by 2025, which positions it to potentially deliver significant returns for investors in the coming years.