With crude prices having slid in Thursday trading, but still sitting above $100 a barrel, Exxon CEO Rex Tillerson told those attending the company's annual strategy presentation Wednesday that it is directing more of its attention toward oil than gas. He also said that a raft of new projects the company has lined up are likely to add about 1.4 million barrels of oil equivalent to production in the next few years.
Breaking the number down further, Tillerson said approximately 80% of the increase will be in crude oil, and that oil production will likely grow by about 2% to 3% during each of the next four years. As he noted, however, that growth can only occur once the company has compensated for a 5% to 6% production decline in existing projects.
The company maintains that it has no preference whether it concentrates on oil or gas. However, as low gas prices apparently aren't inclined to budge appreciably, the $34 billion that Tillerson expects to spend on capital projects this year (a 6% increase from 2010) will be concentrated in such "oilier" venues as Canada, Kazakhstan, Russia, and Iraq. Last year, with the company acquiring XTO, a leading independent U.S. gas producer, nearly half of its total production was in gas.
In the Alberta oil sands of Canada, the company is working closely with Calgary-based Imperial Oil
At the same time, Exxon is pursuing liquids production in California, Texas's Eagle Ford play, and in North Dakota's Bakken formation. In California, Occidental Petroleum
ExxonMobil's $41 billion acquisition of XTO last year has cast the big company among those who are active in the major U.S. shale plays, including the Marcellus Shale in the Northeast and the Barnett Shale in North Texas. The company plans to spend $93 million in the Barnett play alone. Without being specific, however, Tillerson was critical of the stringent state regulation of hydraulic fracturing in production from shale formations.
Finally, Exxon expects to double its oil and gas production by 2020. Given its size and the diversity of its operations, I continue to rate the company high among the oil and gas companies I'd urge Fools to place on their watchlist.
We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Fool contributor David Lee Smith doesn't own shares in any of the companies named in this article. The Motley Fool has a disclosure policy.