In a presentation for analysts today, Exxon Mobil Corporation (NYSE:XOM) outlined plans to invest $25 billion to $30 billion in each of the next five years to meet expected long-term growth in world energy demand. Exxon’s capital spending in 2008 totaled $26 billion.

According to company chairman and CEO Rex Tillerson, Exxon will add a total of 745,000 barrels/day of production when projects begun in 2008 and scheduled to begin in 2009 reach their peaks. The upstream portion of Exxon’s investment will total about $22 billion annually, with another $3 billion targeted at downstream activities and about $2 billion aimed at the company’s chemical business.

The upstream spending will focus on adding new projects, developing existing operations, and exploration. Exxon expects to add 1.5 million barrels of oil equivalent daily to its production capacity by 2015.

Exxon’s plans for downstream development include investing more than $1 billion on increasing capacity for low-sulfur diesel refining at three plants in the US and Europe. Exxon expects to increase low-sulfur diesel production by 140,000 barrels/day by 2010 as a result of these projects. Over the long haul, the company expects to downstream demand to grow by about 1% a year through 2030, with demand for diesel fuel driving the growth.

Exxon projects demand for its chemical products to grow to about 175 million tons annually by 2015, up about 25%.

On the surface it appears that Exxon is planning for long-term organic growth, without going shopping for acquisitions. But the company still has plenty of cash, and buying proved reserves could turn out to be the best way for Exxon to meet its aggressive goals.

Maybe it is the market, or maybe it is a general concern over what growth can be seen.  But shares of Exxon Mobil are down almost 4% at $63.23 after almost an hour of trading.

Paul Ausick
March 5, 2009

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