Exxon Mobil Corporation
Q4 2020 Earnings Call Transcript

Published: 2 Feb 2021

[Operator:]

Good day, everyone, and welcome to this Exxon Mobil Corporation Fourth Quarter 2020 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. Stephen Littleton. Please go ahead, sir.

[Stephen Littleton:]

Thank you, and good morning, everyone. Welcome to our fourth quarter earnings call. We appreciate your participation and continued interest in Exxon Mobil. I am Stephen Littleton, Vice President of Investor Relations. Before getting started, I hope all of you on the call, your families and your colleagues are safe in light of the continuing challenges we face as a result of the coronavirus pandemic.

[Darren Woods:]

Thank you, Stephen. Good morning. It’s good to be on the call. I hope you and your families are safe and healthy. I’m sure I’m like many of you happy to close the book on 2020 and optimistic for the year ahead. As you know, the pandemic has had devastating impacts on people and businesses around the world. These effects were especially severe in our industry. And as you consumption collapsed as economies shut down, oil prices hit their lowest point in history and refining margins fell well below their 10 year lows. It was the first time in memory that we saw simultaneous lows in each of our businesses. As I discussed a year ago, our response throughout these challenging times was primarily focused on three areas, protecting the health and safety of our employees and communities, keeping our operations running to support COVID response efforts, providing critical energy and products and aggressively reducing spend while preserving value to ensure we remained in the best possible position for the eventual recovery. We’re pleased with how we performed on each of these. Our employees stepped up and made contributions to those in need of our products from hand sanitizer, especially products for protective equipment to fuel for first responders. Through extraordinary efforts, we kept operations running 24x7 while achieving strong safety results and exceptional reliability performance. At the same time we leveraged on the ongoing work in reorganizing our Upstream and Downstream businesses to significantly reduce costs and preserve value in an extremely challenging and uncertain market environment. We delivered on our cost reduction objectives and outperformed our revised plan, which we shared with even April.

[Stephen Littleton:]

Thank you for your comments, Darren. We will now be more than happy to take any questions you might have. Operator, please open up the phone lines for questions.

[Operator:]

Thank you, Mr. Woods and Mr. Littleton. The question-and-answer session will be conducted electronically. And we’ll go first to Doug Terreson with Evercore ISI.

[Doug Terreson:]

Good morning, everybody.

[Stephen Littleton:]

Good morning, Doug.

[Darren Woods:]

Good morning, Doug.

[Doug Terreson:]

Darren, Exxon Mobil’s equity has outperformed S&P Energy and S&P 500 too since the new capital management plan was announced in November. And as you guys have posted further progress on restructuring exploration and environmental plans too, we did have some industry help along the way. But on this point, it seems like you’re pretty encouraged about the outperformance that you’ve seen on the structural efficiency component that you talked about earlier today. And that divestitures, which are another part of the capital management program probably recover, but in a better price environment. So, my question is whether or not you agree with my characterizations of these two items and also whether or not you have any additional color or specifics on these parts of the capital management program, which make you optimistic about performance in those areas?

[Darren Woods:]

Sure. Yes. Thanks, Doug. Thanks for the question. And before I answer that let me just take a minute to congratulate you on your pending retirement, well-earned...

[Doug Terreson:]

Well, thank you.

[Darren Woods:]

I miss having you in the mix.

[Doug Terreson:]

Well, thank you.

[Darren Woods:]

With respect to your comment and the delivery of some of the improvements we’ve made, I just maybe step back and provide a little perspective on the journey we’ve been on, as we looked at the business and focused on the opportunities to improve performance over time, we recognize the need as a capital-intensive industry to make sure that we had a very healthy and attractive set of capital investment opportunities, which is what we focused on at the beginning to recognize the size of that opportunity and the leverage that it gives us with respect to earnings and cash flow. And so, as you heard, early on with my tenure that’s what I was focused. We generated a very, very attractive set of investments. At the same time, we were progressing an organizational restructuring, the move from this functional organization that we had put in place at the time of the merger of Exxon Mobile, which served its purposes and added a lot of value at the time as we brought those two companies together. But with time, recognize the need to move to an organization that had a better line of sight end-to-end on the business and a more direct accountability for profit and loss. And we completed that transition in 2019. And I think, last year in the March analyst meeting, I mentioned that we were focused on taking advantage of the new organization to drive efficiencies. And I would say 2020 delivered on that. And as I mentioned in my prepared remarks, we see more opportunity down the road and have actually built into our plans for 2020 these improved efficiencies. And so that’s what I would tell you is the foundation of the plans that we’ve got and the improvement opportunities that we see going forward independent of where the market takes us. Then on top of that, obviously, and as we said back in our third quarter call with where the impact of the pandemic and the price response to the loss of economic activity, we recognize that that had to be a temporary downturn, just because of the fundamentals associated with the industry and wanted to make sure that we prepared ourselves for what would be an eventual recovery recognizing the timing of that is somewhat uncertain. And I would say, as we sit here today, I’d still characterize as somewhat uncertain, although encouraging here over the last several months. But we haven’t -- we’re not kind of taking that to the bank, so to speak, we’re prepared and keeping an eye on how the market develops and we’ll respond accordingly. So, I feel good about where we’re at today. I think we’ve got our company in a position and our organization, focused on the right things. And then we’ve got an opportunity set with flexibility that we can execute as we go forward. And as I said, as I look at the first quarter where we’re ahead of where we thought we were going to be and we’ll already start to delever and continue to progress our investment. So, I feel as good as you can given some of the uncertainty out there with the residual pandemic effects.

[Doug Terreson:]

Yes. And then, Darren, you guys made the most asset-rich company in our sector. And last year was kind of an impossible year to even think about selling assets probably. But you have a lot to work with. And so spend a minute on that too on divestitures and progressing that plan?

[Darren Woods:]

Right. I think, as you saw last year when we’ve been talking about, we’re really trying to focus the activity on the highest value, highest return, lowest cost of capital at which has meant prioritizing investments and high-grading the portfolio. So, we announced a divestment program, something that we hadn’t historically not done and have been out prosecuting that divestment program.

[Doug Terreson:]

Okay.

[Darren Woods:]

We’ve got assets in the market today. But as we said at the time we announced it and continues to be the underlying principle associated with a divestment program is -- it’s a value-driven program. So, we’re looking to make sure that we can find a buyer that values the assets, cease more opportunity than we can prosecute with the asset. And so that is what drives the decision. Obviously, last year with all the uncertainty, wasn’t a whole lot of activity in this space, although we did make some progress. We have mechanisms with respect to the deals that can accommodate some of the price uncertainty, and that’s going to continue on -- I would say as the market recovers and people’s views develop more fully, I expect we’ll have additional advancements in that program.

[Doug Terreson:]

Okay. Great. Thanks a lot.

[Darren Woods:]

Thank you, Doug. Best of luck.

[Operator:]

We will go next two Neil Mehta with Goldman Sachs.

[Neil Mehta:]

Good morning, guys, and thank you for the incremental disclosure. Lots of interesting stuff to unpack. I guess, the first question is I just wanted to confirm, did you say you expect to be on the low end of the $16 billion to $19 billion band this year? And then the follow-up around that is you’re at $67.6 billion of gross debt. Is there an absolute level that you guys are gunning for here when it comes for -- comes to your gross debt level?

[Darren Woods:]

Good morning, Neil. Yes. I will confirm my -- that was the comment I made. I do expect to be on the lower end of that range. And then, our plan with respect to debt -- we talked about in the third quarter, we kind of set a hard limit of around $70 billion. We didn’t want to go above that and working hard to bring that down, expect for that to come down in the first quarter. And we’ll continue to work to bring that down to really rebuild the strength of the balance sheet. There’s one of the three capital allocation priorities, and we think absolutely critical to underpin the business we’ve got going forward and to ride through the cycles that we face. And clearly, 2020 was a very deep down cycle, one that frankly, we’ve never seen before. And I’m pleased that the capital structure we had in place and our ability to respond to that unprecedented marketing environment that was very successful. We leveraged the use of the balance sheet, obviously, and we’re now going to rebuild that to have the capacity we need to continue to weather the ups and downs of the cycles that we know will happen as we go forward.

[Neil Mehta:]

Thanks, Darren. And the follow-up is just your perspective on M&A, we -- yes, last year was as the busy one in terms of incremental E&P deal. Just how does Exxon think about the M&A landscape, the bid/ask right now? And certainly, the super major cycle that we saw in the late 1990s, early 2000s created a lot of value. There was some press speculation on that, and I’m not sure what you can say, but conceptually, do you see the potential for major on major consolidation? Or is that too difficult to execute, given all the challenges of consummating that type of deal?

[Darren Woods:]

Yes. Sure, Neil. Obviously, I’m not going to comment on speculation in the press. But what I would say is the approach that we take in this space has been pretty consistent. And we’ve talked about that over the years. And it’s really looking for value opportunities where there’s another company that we can leverage synergies, leverage a different port -- differences in portfolios that basically have compliment one another. We look at a lot of things and that whole space we’ve been active in that for quite some time. We continue to be active to look for opportunities to grow value, unique value. And that’s kind of what drives in our mind the opportunity. And, as you know, we talked about that past, having always found opportunities that we felt were valued correctly or valued in line with what would be required to kind of extract unique value through an acquisition or a merger. But we continue to look in that space and it will be an active program going forward.

[Stephen Littleton:]

And if you don’t mind I’d probably add. The other thing that we look at and is the fact that it has to compete against our existing portfolio projects, which is industry leading best. So, when we look at any type of potential acquisition, we look compare it relative to some of our other investment opportunities notably an Upstream and Chemical space. Thank you, Doug.

[Darren Woods:]

Thank you, Neil.

[Operator:]

We will next to Doug Leggate with Bank of America.

[Doug Leggate:]

Thank you. Good morning, everyone and happy New Year. I wonder if I could start off asking you to address the 800 pound gorilla driven , which is obviously the criticism of the level that you and the management team by activists. I want to ask specifically to, how Exxon is responding, it seems to us disclosure, for example, in carbon capture and emissions reductions and your demonstrable capital flexibility are all something that perhaps has been overlooked in the past. I wonder if you could speak to how you’re looking to address that and I’ll go to follow up, please.

[Darren Woods:]

Sure. Well, good morning, Doug and happy New Year to you as well. What I’d say is, last year clearly was unprecedented event something that forced some dramatic action in the industry as a whole and our company. And as we leverage the new organization and reconfigured our plans in response to the pandemic and the consequences of that, we changed a lot of things and operating under a new set of constraints, obviously drawing down our balance sheet to the point that we did required a different approach going forward. And so that was the focus and rebuilding the plans for 2020. And as I’ve said I think the organization as a whole responded very, very well to the challenging conditions, not only in operating our businesses in the environment, but at the same time, putting together very thorough well thought out plans for how we would go forward and accommodate the increased uncertainty and the recovery that we knew we had to make coming out of the pandemic. And frankly, If we put those plans together, we recognize that was a change from the past and our past plans and wanting to make sure that we effectively communicated that going forward. So, we had a very early release at the back end of the year after the Board approved the plans that provided some perspective with the intent of coming into this call and more thoroughly taking the community -- investment community through more details of that plan. And that’s what we’ve been doing here. All the things we’ve talked about, as you can clearly tell, if you look at the materiality of it and its work that’s been underway for quite some time. I’d say 2020 a lot of effort by the organization to put those together. And our intent is to make sure that we keep the outside community kind of up-to-date with those plans given the constraints that we’re operating under.

[Doug Leggate:]

I realize it’s not an easy question to answer, so I appreciate the clarity. But let me just pick up on one issue as my follow-up, and it’s on cost flexibility and the dividend. Because it seems you’re -- I don’t want to say unequivocal, but you’re certainly providing a great deal of emphasis on the sustainability of the dividend. So, I wonder if you could just speak to that. I think you answered, maybe talk to the inflection in non-productive capital, because you have spent ton of money on things that it seems to just about to get to that inflection, which can support that perception of dividend surety. So, I wonder if you could just address those issues now we get there. Thank you.

[Darren Woods:]

Sure. Yes. I think -- so, we’ve built the plan based on the three capital allocation priorities I touched on as part of my prepared remarks and try to optimize the value to the corporation, recognizing that if you look at the portfolio and the underlying strategy that we embarked on back in 2017/2018 timeframe, that remains in place. The even stress testing the projects and the investment opportunities we’ve had we have in the portfolio continue to look attractive in this environment. You saw the Upstream portfolio, which is the biggest part of our spend show that. So, our intent then is to kind of pace that investment as we move forward, reflective of the market environment. And we’ve structured the capital program, again, consistent with the experience that we had last year and the drawdown that we had in capital to make sure that we have flexibility to adjust. If you think about what we’ve put in that flexible bucket, there is a large chunk of or a piece of short-term -- the short cycle investments in the Permian where we clearly have flexibility. We’ve got pace projects, so things that are Global Projects organization as we were working to reoptimize the capital program, I think very cost-effectively and working with our EPC partners suspended some of that projects, but put them in warm standby so that we can start those back-up again. That’s in our flexible spending. And as I mentioned, we’ve got some longer term spend to fill the pipeline early on so that we’ve got things as we move outside the plan period. So, all those things are -- and if we can make decisions in real-time about whether we continue to progress those or pull back in that area depending on what the environments at. And because we can do that and as we’ve pointed out in these charts that we’ve shown, we’ve got lots of flexibility under different price environments to sustain the dividend. So, we feel really good about where we’re at today that we’ve got good upside with respect to growing the cash flow, as I’ve showed. But at the same time, if we need to and the environment dictates, we can pull back. I think that’s the optimal position as to develop options, to have the flexibility to adjust if you need to. We’re very keen not to pull things back to a point where we didn’t have plans to take advantage of the portfolio that we had if the market environment was better than what many were thinking of last year. So, our intent was build plans that are as best as possible what the market expects and then be positioned to pull down if necessary. Going in with no plan trying to ramp up is a lot harder than going in with a plan and coming down.

[Doug Leggate:]

I think your flexibility is underappreciated by a lot of people. Thanks so much, Darren. I appreciate the answers.

[Darren Woods:]

Great. Thank you, Doug.

[Stephen Littleton:]

Thank you, Doug.

[Operator:]

We’ll go next to Phil Gresh with JPMorgan.

[Phil Gresh:]

Hey, good morning, Darren.

[Darren Woods:]

Good morning, Phil.

[Phil Gresh:]

So, first question and perhaps it’s a signal of the times. But the charts around your flexibility only take the oil price up to $55 at this point, which is notable considering we’re at $58 now. So, I’m curious, is this message today, one, where we’re supposed to be taking it as an official cap on the capital spending long-term in the $20 billion to $25 billion range, such that any additional cash flow in an upside case would be fully committed to debt reduction? You did mention shareholder distributions in one of those slides as well. So, just any incremental thoughts there.

[Darren Woods:]

Sure, Phil. I’d kind of come back to we don’t know where prices are going to go. And I think we have not tried build plans based on speculating where prices will go. Instead what we’ve tried to do is build plans based on what a reasonable assumption is. And when I say reasonable, we test our price bases against kind of third-party and where the market -- generally the market is. And our expectation is to be kind of within and certainly on the lower end of the price expectations and that’s how we build the plans. We recognized when we put that together that those prices probably aren’t going to materialize and could be higher or lower and so they’ll have flexibility in. I wouldn’t read anything into how high we went on that chart. I mean it’s kind of just a -- it was a number that we pick. The higher it goes, the better off obviously we’re at. And I would tell you our first priority above and beyond the plan if we see a price environment that’s higher than we have anticipated, it would be to continue to delever and to rebuild the strength of the balance sheet. Because again I would tell you -- and as I’ve talked about today and in the past, balancing across the three capital allocation priorities is absolutely critical and you take different decisions in the short-term. Last year when we recognized we were in a very deep downturn, one that we also believe would be temporary, prioritized the dividend and made sure that we continue to pay that and grew on the balance sheet. As we come out of that, which is what we expected, our plan is to rebuild the balance sheet so that we can be in a position going forward to absorb what other shocks come in the future. And at the same time, we wanted to make sure that we are continuing to invest in these accretive projects, because ultimately they are going to underpin the long-term success of the corporation. So, I’d say the key word as we work through the last year is balance. And I’d say the other one is optionality, flexibility. And that’s what the plan now reflects and what we’ve talked about today.

[Phil Gresh:]

Okay. Got it. My follow-up question would be around Slide 30 and your commentary about how the first quarter is shaping up. Obviously, on this slide the only area where the margins are well below the low end of the range is on Downstream. And based on your long history in that business and how you’re seeing things today specifically for Downstream, would you say that the margins right now are consistent with low end of the range and kind of the $3 billion annualized uplift that you’re talking about? I recognize you made a comment that in totality you are there, but I’m specifically thinking more about the Downstream? Thank you.

[Darren Woods:]

Yes. What you see on the Downstream in that chart 30, we’ve put a kind of a January estimate and there is some kind of where we are at currently, and it’s still well outside that historic range. So, I think today if you look at the industry as a whole across the globe where margins are at, it’s not a sustainable position just because of the losses that are accruing. And if you look back in history, I think, there is a certain physics associated with these businesses that say, it can only go so low before you’re not covering your cost and you’re bleeding cash, so you’re going to have to make adjustments. And that historical range, in my mind, kind of sets those limits. I mean, these are commodity businesses. And if you take a price that goes below the marginal cost of supply, it’s going to end up costing industry as a whole and eventually players will rationalize and drop out. And that -- for as long as I’ve been in the Downstream, that business has been long supply and it’s a slow process to rationalize it tight, particularly as more refineries come on out in Asia. So, I think what you’re seeing there is the time cycle associated with rebalancing the markets and the supply demand balance. Obviously, demand is off pretty significantly what was already kind of marginally long business. So, it’ll be a function of demand coming back and how quickly that recovers and then continued rationalization. As Stephen said, we’ve seen last year much higher levels of rationalization and my expectation would be if we don’t see the margins recover backed within that band, you’ll continue to see that.

[Phil Gresh:]

Got it. And do you think we’ll get there in 2021 towards the low end at some point?

[Darren Woods:]

I think it’s very dependent upon how the recovery goes, how the economies pick back up again. I think it’s -- there is a mix view and we’ve tried to be pretty conservative in our planning just recognizing the mechanisms required to rebalance the market that’s going to take time. My expectation is the second half of the year will look a lot better than the first half. But exactly where we end up on that bar, I think it’s tough to tell. I think, eventually, we will get back there. If not, back into this year, sometime into next year and potentially see an overcorrection, so to speak, as demand continues to pick up and with the reduced supply, we’ll see that tightness in the supply demand marketplace self out in the Downstream is what I would expect. The challenge with all these things -- I’m talking about very fundamental things. It’s not a question of if that’s going to happen, but when. And I think that’s -- I think the trick in this game and our view is you should recognize it’s coming, but not build the plan based on the hope that it does.

[Phil Gresh:]

Great. Thanks, Darren. Look forward to more updates in March.

[Darren Woods:]

Thank you, Phil.

[Operator:]

The next to Jon Rigby with UBS.

[Jon Rigby:]

Thank you. Thank you Darren for taking the questions. The first one is on the announcement around CCS. I mean, it seems to me is that you’ve taken your time the step into it is a considered one. And I guess it must be based at least with a view that the prospect of the business there. And so, my question was, what do you think has to happen or are you able to describe some of the steps that have to happen, both technologically and regulatorily fiscally to get us from where we are now to something that looks like a genuine business opportunity? And the second question, if I ask a follow-up as well at the same time. Just on CapEx, is it fair to characterize the level of CapEx that you need to address one of those three objectives that you had, which is to sustain the dividend over the very long term, but CapEx needs to be in that 2021 to 2025 and the current level of spend that you’re projecting for 2021 is more around about protecting the balance sheet and therefore not a sustainable level of CapEx in the long-term consistent with your payout? Thanks.

[Darren Woods:]

Yes. Sure, Jon. So, on the CCS, I think -- and as I indicated and as I’ve talked, I think for as long as I’ve been publicly speaking about this is, we’ve recognized that carbon capture and storage is a critical element to achieving the ambitions of Paris Agreement. And one of the things that we’ve noticed over time is -- and I think the IEA described it as momentum in this space is that we’re beginning to see a broader recognition of the importance of that technology. I think the industry for a long time is recognized, but I think more broadly it’s being recognized as an important part of the solutions set in terms of achieving the ambitions of the Paris Agreement. So, we’ve been working for quite some time on the technology and trying to address the cost side of that to find a technology that was lower in cost, which would then make the opportunities more attractive and accelerate the deployment of CCS. And so, a lot of work over the years on the -- what I’d say is the fundamental process technology in the way that can actually concentrate CO2. And as we look at that portfolio, we’ve been advancing. There is more work to be done there for sure, still technology developments that we’ve got to progress. But we’re now seeing, I think, with the increased recognition of the need for this technology, governments being more amenable to and understanding and recognizing the need for policy frameworks and regulatory frameworks, legal frameworks to support establishing CCS. We’re seeing investor demand, where people are interested in investing those types of projects. So, I think there is money that’s looking for opportunities to reduce carbon emissions. And then there is a market growing for reduction credits. We see a lot of things, a lot of market developments and momentum in the market as a whole, which all contribute to building a sustainable business. And so, we felt like, given where things we want to, now is the time to bring a more concerted effort in this space and start making sure that we’re staffed and we’ve got people working hard, engaging with governments to help move all those things along. If you look at that portfolio of products that we’ve got today, one of the biggest challenges is in the policy and regulatory framework space. And so, that’s a real focus area. And I think certainly here in the U.S. we’ve got an administration that’s interested in progressing in this space and we’re there and are ready to talk with them and help provide some perspective from an industry standpoint. We think the timing is right and we think we’ve got -- we’ve put the right people in this new organization to kind of move that forward. But it will be I think this is a complex area. There are a lot of variables at play that we’ve got to bring together and we need to make sure that we got our senior management focused on bringing those things together. On your CapEx, 2021 CapEx, you’re right, that is the low CapEx number for us. In fact, if you look at the history and going back in time since Exxon and Mobil merged, it’s the lowest level of capital spend that we’ve had in any year. And so, I think it’s fair to say, just using history as a guide that that’s probably not a sustainable level of CapEx. And it is a response to the environment that we found ourselves in and the recovery that we’re making coming out of that environment. And I think longer term going forward, which is one of the reasons why our 2022 through 2025 range in guidance is higher. It’s just a recognition that in a more steady state environment, the spend needs to be higher to support kind of the growth and to underpin the capital allocation priorities we have.

[Jon Rigby:]

Makes sense. Thank you.

[Darren Woods:]

You bet Jonathon.

[Operator:]

Over next to Sam Margolin with Wolfe Research.

[Sam Margolin:]

Good morning. Thank you for following on me.

[Darren Woods:]

Good morning, Sam.

[Sam Margolin:]

I did want to dig into commercialization of carbon capture a little bit, because there is a few paths you could just sell carbon credits where applicable, but it also integrates with the rest of the business in an interesting way, particularly gas in terms of customer overlap and bundling opportunities. I know it’s early days. But can you just talk about that as something that’s kind of leading the way in this commercialization effort? How it overlaps with the existing business? Thanks.

[Darren Woods:]

Yes. Sure. I think the point you make, Sam, is the one maybe I was trying to hit on with Jonathon is, this market demand in terms of people looking for cleaner options and offsets and emission reduction steps. And so, we think there’s an opportunity there with that with many of our -- the products in our portfolio. And we see that across, frankly, all of our sectors, the Downstream, you mentioned gas, we certainly see that there in gas and we see opportunities from -- in terms of our recycling or environmentally improved footprint in the Chemical business as well. So, I think, that -- as I mentioned, the momentum that we’re seeing broadly in this space is opening up market opportunities, which we think this business can take -- get engaged with and make sure that we are contributing where we can. I mentioned, these -- to make a difference and move the needle, there needs to be fairly broad investment over time and we have a lot of capabilities that lend itself to that. Not only do we have the technology work that we’ve been doing, we’ve got a projects organization that knows how to scale up technologies and apply. Then we have a manufacturing footprint that we can take advantage of. We’ve got a very good understanding of subsurface and how that works. We’ve got midstreams in pipeline. So, we -- if you look at the different elements that have to go into successfully building a CCS business is very consistent with what we do today and very much in our wheelhouse. So, we see that as an opportunity. And frankly, the challenge has been the development of the market and the needs here. And again as we see the momentum in that grow, we see that opportunity. So I think that’s the work and what we're focused on doing here.

[Sam Margolin:]

Thanks. And then just as a follow-up in terms of scale and the addressable market here, your slide on carbon capture as a percentage of the total carbon offset targets around 15%. Let’s say, Exxon in your 2019 Sustainability Report, you have about 120 million tons of Scope 1 and 2. Emissions -- is the 15% number of that kind of a reasonable scope, call it, like 18 million tons potentially of scalability here, is that kind of the way you're thinking about it?

[Darren Woods:]

Well, I would tell you, in part forming this -- moving from venture to a full blown business is the -- one of the advantages within the company is that brings that business into our plan process where we can put together marketing and business plans, put together annual plans and lay all that opportunity. And I would tell you, Sam, this is the year that we will do that with this business. We’ll give Joe a chance to get in the chair and then get his organization focused on marketing and business plan and then translating that into our company plan process and then at the end of the year we’ll have -- we’ll start to kind of track that like we do all the other businesses. And so, I’d say that’s a question that we’ll answer as we go forward and look at these opportunities, made a big variable in all of this is just, there is a lot of things that have to come together to make these things move and progress. And so, part of it is a function of how that external market moves, part of it’s a function of how quickly the governments respond and put in the right kind of regulatory and policy frameworks. And so, I think it’s a complicated space, but it’s one that a very consistent with what we've historically done. And so, I feel pretty optimistic that we can come in and contribute and actually help in this space, and it’s very consistent with our competencies and capabilities. And so, this is the space that we feel like where we can contribute and help society reduce their emissions. So -- but I would say stay tuned, there is a lot of work that has to happen here. And as we develop that, we’ll be sharing with you how we see that the potential here and how these opportunities are developing.

[Sam Margolin:]

Thank you so much.

[Darren Woods:]

Thank you, Sam.

[Stephen Littleton:]

Operator, I think we probably have time for one more caller.

[Operator:]

Yes. It looks like we have time for one more question. Our last question will be from Devin McDermott with Morgan Stanley.

[Devin McDermott:]

Hey. Good morning. Thank you for squeezing me in. Appreciate it.

[Darren Woods:]

Good morning, Devin.

[Devin McDermott:]

So, I wanted to maybe first follow-up on the line of questioning here on the low carbon business. And the last few questions are on the carbon capture side, but you mentioned some other opportunities in hydrogen and biofuels. And I was wondering if you just elaborate on the types of projects and technologies that you’re focused on advancing there. And then as part of that, if you think about this low carbon spending that you’ve planned in the next few years, are there pockets of opportunities across these businesses that are starting to compete for capital with the legacy Upstream, Chemicals and Downstream spending that you have in the capital program, and where are those biggest opportunities looks tangible in the near-term for scale and capital?

[Darren Woods:]

Yes. I would say -- so we’ve got -- we’ve had a very active technology portfolio across this whole space. You may recall in the past, I’ve talked about our energy centers, we’ve got around the world where we’ve partnered with universities, very focused on investing in areas where we see the potential for alternatives. Biofuels is an area where we’ve got a number of different technology drives to for -- to see if we can develop more cost effective biofuels that work at scale. A lot of work in process technology and how we take existing processes and make them more energy efficient, less emissions associated with them. So, trying to leverage some of the new materials that are out there. I’d say, we’ve got a really broad spectrum of opportunities we’ve been working on. We’ve got relationships with 80 universities where we’re not necessarily steering that technology work, but we are participating in it. And as we see those technologies advance and look -- and get higher potential -- have a higher potential of those things, we would look to try to bring into the portfolio. So, we got -- what I’d say, we’ve cast a pretty wide net around the technology space, recognizing that it’s requiring some level of evolution, if not, breakthroughs in technologies for them to be successful. And so, since you can’t really plan for that we kind of keep our finger on the pulse of a lot of different technologies with the intent then to -- as they look more promising, but it bring them into the emerging and then commercial technology space. And so, that’s the work that this new group will be focused on. And again, we’ll complement what we’re doing in the carbon capture and storage. We’ve got the biofuels work that we’ve been doing, and we’ve got the process technology work that we’ve been doing and a lot of those things overlap with one and other. Certainly -- and, of course, that then also has hydrogen and the process technology work we’re doing and the CCS work together have a lot of overlap with potential for hydrogen generation. So, I’d say that’s the space that we tend to be working on from a technology standpoint. And then with respect to the spend, this is a long-term focus area for our facilities and businesses. And you can see from the progress we’ve made with reducing greenhouse gases, it’s not something new, it’s something we’ve been after -- year after year after year and those opportunities continue to present themselves. And I mentioned in my prepared remarks that with the new organization and new processes that we’ve put in place, we’ve got more direct and better line of sight to those opportunities that we can make sure they’re getting funded and moving forward and that’s all built into our plans and is built into our 2025 objectives that we’ve laid out.

[Devin McDermott:]

Great. Thanks. Very helpful detail. And sounds like a lot of exciting opportunities. My follow-up -- hopefully, a quicker one here. As you think about just the capital spending range over the next several years of $20 billion to $25 billion and contextualize that with the analysis that you had in the slides on the amount of cash flow contribution in 2025 and some of the new projects coming online. I was wondering if you could just help us pinpoint what level of spend that you think is required in order to just hold cash flow across the business flat over a multi-year period, understanding it’s higher than the 2021 stand, some are within that $20 billion to $25 billion. Anyway, we can fine-tune that estimate a little bit in terms of the maintenance CapEx, the whole cash flow steady?

[Darren Woods:]

Yes. Well, I think the way we tend to look at it is, how you maximize the value. And we don’t have an objective of finding old volumes or any other metric, it comes back to -- if -- what are the projects that we have available to us, the investments. What are the returns that we think we can generate from those investments? What advantage do they have versus industry and within our own portfolio? How robust are they to the price environment? So, I would say, that as we look to build up our investment profile, it’s understanding what the value of those investments are. And then putting those in the context of the constraints that we’re operating under to see which ones get funded and how we prioritize them. So, I would say, 2020, one of the things given the impacts of coronavirus and role on our balance sheet is we’ve really prioritized and focused on the highest value first. We still got a really deep portfolio that we will continue to advance as the circumstances allow and as the market allows, and that’s how we’re going to kind of go forward. And that range that we’ve given in the outer years is indicative of what we think it would be required to continue to fund that very attractive set of investments. Again, I’ll come back to you, though, if the market and the price environment is not supportive of that, that will be a constraint that continues to moderate that capital. And as I’ve shown -- I showed on the chart, we’ve got lots of flexibility, particularly as you move out into the outer years to pull back if we feel like that’s the best thing to do given the environment that we find ourselves in. Make sure we continue to pay a very strong dividend and maintain a balance sheet that’s going to allow us to ride through the cycles and continue invest. Those are the three things and I would just say there is no hard formula. It’s responding to the current circumstances and making sure that we’re striking the right balance, because each of those plays are really important part in the value proposition for the corporation.

[Devin McDermott:]

Understood. Thanks again for taking my questions.

[Darren Woods:]

Thanks, Devin.

[Stephen Littleton:]

Well, thank you for your time and thoughtful questions this morning. We appreciate you allowing us to opportunity to highlight fourth quarter results. We appreciate your interest and hope you enjoy the rest of your day. Thank you and please stay safe.

[Darren Woods:]

Thank you.

[Operator:]

This concludes today's call. We thank everyone again for their participation.