Global integrated energy giant ExxonMobil (NYSE:XOM) is investing heavily in new oil production. That's going against the grain today with low oil prices and Wall Street increasingly pushing oil companies to pull back on their spending plans. The thing is, Exxon thinks it has some really great opportunities ahead of it, and it doesn't want to slow down. Its drilling in offshore Guyana, for example, is an incredible opportunity that's only just starting to show results. Here's what you need to know about this deepwater project.

Unrepentant

Exxon intends to spend up to $35 billion a year on its capital investment plans through 2025. The weak oil and natural gas price environment hasn't deterred it from this goal, with CEO Darren Woods explaining during Exxon's fourth-quarter 2019 earnings conference call that, "We believe strongly that investing in the trough of this cycle has some real advantages as the industry has pulled back, projects costs come down resulting in lower cost of capacity additions. They are then available to catch the cycle upswing. This is a win-win, capturing high margins at a lower cost." 

An offshore drilling rig

Image source: Getty Images

Clearly, Exxon is willing to buck the wider trend of energy companies pulling back on their drilling efforts. On the other side of the equation, for example, Chevron is happily touting the fact that it is spending less, relative to its cash flow, than any of its oil major peers. And some companies in the upstream space haven't actually been given much of a choice on pulling back, as weak finances and low oil prices have combined to push a number of smaller players into bankruptcy court. 

Exxon would likely see these things as net positives, based on its long-term outlook. And, notably, it has the financial strength to keep spending even when times are tough, with a financial-debt-to-equity ratio of around 0.15 times or so. The biggest news on the drilling front so far has been the energy giant's production growth in the U.S. onshore space, which increased 79% year over year in 2019. And there's still years and years worth of growth ahead for this region, too. But there was another important development in 2019 that investors need to look at: Guyana.

Starting slow and growing fast

Exxon first discovered oil off the shore of Guyana in 2015. It owns roughly 45% of this project, with Hess Corporation controlling 30% and Nexen Petroleum Guyana Limited the remainder. After a second discovery in the region, Exxon and its partners made the decision to start a long-term development project. At the time, in 2017, the company believed there were roughly two billion oil equivalent barrels in the find. 

At the end of 2019 Exxon announced that Guyana production had finally started, with the goal of pulling up around 120,000 barrels of oil from the project on a daily basis. That, however, is just the start. Deepwater oil projects like this take years to fully develop, and a lot has happened between 2015 and 2020. 

XOM Chart

XOM data by YCharts

For example, Exxon made four discoveries in 2017 in offshore Guyana, five in 2018, and another five in 2019. In early 2020 it announced yet another successful discovery, bringing the total to 16! When the company announced the most recent find, meanwhile, it added two billion barrels of oil equivalents to the total expected from the project. That's as much as the first two finds that led to the investment decision, and brings the new total oil reserve estimate for the project to a massive eight billion barrels -- four times what it was in 2017. That update, by the way, doesn't include the most recent discovery, which will be added to the total at a later date. 

So while production in Guyana has only just started, there's a huge opportunity for Exxon and its partners. In fact, the 120,000 barrels a day is expected to increase more than three times over by 2023 when the oil giant has just three wells in operation. It doesn't currently spell out the growth after that, but it is already making plans to develop more wells in Guyana, which could bring production to between 700,000 and 800,000 barrels a day by 2025. 

Clearly this is a big deal for Exxon, and will help to drive production results over the next few years. Add it to the growth in the onshore U.S. space and the company is achieving a great deal of success today. Exxon can't control the price of oil and natural gas, but it is proving to investors that it can execute on big projects as it looks to live up to its production growth plans.

Out of sync

It's hard to love Exxon right now, noting that heavy spending while oil prices are low is not something Wall Street is happy to see. That said, if you can think long-term along with Exxon's management team, the success it is having with its drilling efforts looks likely to set up a multi-year upswing in production growth. Right now that's not a good thing, but if CEO Woods is right about the long-term supply/demand dynamics, it could eventually lead to a big payday for the company and its investors.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.