The old cliche “If it’s not broken, don’t fix it” could double as the motto of ExxonMobil Corp., which plans to keep its proven long-term approach of steady growth with disciplined investment in large energy projects going forward. Who could blame the energy Goliath, which posted more than $36 billion in profit for 2005 — the largest profit for a U.S. company in history (see Daily GPI, Jan. 31).

In a presentation to analysts at the New York Stock Exchange on Wednesday, ExxonMobil CEO Rex Tillerson said the company expects to continue its focus on long-term fundamentals and the identification of resilient projects and other investment opportunities. “Throughout the inevitable highs and lows of the business cycle, our approach has continued to deliver industry-leading returns, superior cash flow and growth in shareholder value,” he said. “Simply put, it works.”

Tillerson said the company’s project inventory at year-end 2005 will develop 26 billion boe net to ExxonMobil, and the company expects to start up more than 20 new global projects in the next three years to produce even more energy to fuel vehicles, light and heat homes, and power businesses around the world. He said that ExxonMobil invested a record of nearly $18 billion into its businesses in 2005 and expects to up that amount to near $20 billion a year between 2007 and 2010 (see Daily GPI, March 9).

Tillerson added that the company does not incur the cost of refocusing its organization every few years on a new set of priorities. He noted that ExxonMobil’s investment strategy has remained consistent. “It is not driven by short-term swings in commodity prices or earnings,” he said, noting that the company tries to invest in projects that “remain attractive” in the long-term. “We are long-term driven, we are patient and we are not opportunity constrained.”

He said the company’s consistent long-term approach to technology investment and proprietary research gives ExxonMobil a competitive advantage. However, he warned that there has to be a balance between “breakthrough research” and the “extension of existing advantages.”

“In 2005, we again delivered more than $1 billion in cost efficiencies and we expect to deliver another $1 billion in 2006,” Tillerson said. “Our improvement initiative pipeline remains full.”

Detailing the company’s upstream segment, Stuart McGill, ExxonMobil senior vice president, said 2005 brought record earnings on the strength of oil and gas prices and the segment’s steadfast strategy of seeking and identifying all “attractive exploration opportunities,” while investing in projects that offer “superior returns.” He added that upstream’s strategies have remained unchanged for a number of years and are unlikely to change in coming years. These strategies “are not likely unique to ExxonMobil,” McGill said. “What is unique to ExxonMobil is our ability to execute them.”

From 2001 through 2005, McGill said ExxonMobil’s project portfolio has increased 50% from 80 to 120 projects. Looking at projects in the pipeline for North America, McGill said the Gulf of Mexico deepwater Thunder Horse development is expected to start up in 2006 following a year delay. July 2005’s Hurricane Dennis damaged the Thunder Horse platform and, along with Hurricanes Katrina and Rita, is responsible for delaying production start-up (see Daily GPI, Jan. 9).

In 2007-2008, McGill said there will be continued activity in bringing on Prudhoe Bay satellite fields and the first phase of the Piceance Basin tight-gas project in Colorado, which ultimately could yield some 35 Tcf of gas. “Our confidence in developing enabling technology allowed us to acquire a significant acreage position in the Piceance Basin in Colorado. The low permeability rock containing gas requires fracture stimulation to produce at commercial gas rates.” He noted that while the industry has had a tough time accessing tight gas economically, ExxonMobil’s technology has made it possible for the company.

He added that with all of the company’s liquefied natural gas (LNG) interests in Qatar, the company hopes to move forward with its U.S. Gulf Coast regasification terminal.

In 2009 and beyond, McGill said the company expects large projects in the U.S. with Alaska gas and Piceance and in Canada with Mackenzie gas. “In North America there has been encouraging progress over the last year on the two large pipeline projects to bring Arctic gas to the Lower-48,” he said. “In Canada, the 1.2 Bcf/d Mackenzie Valley pipeline is currently in the public hearing phase. In Alaska, we have reached an agreement with the state administration on the major provisions of a gas fiscal contract that would provide the predictable and durable fiscal structure needed to further progress the 4.5 Bcf/d Alaska gas pipeline project. Once finalized, it will move next to public and legislative reviews.”

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