Exxon says output growth on track even as crude price drops

JOE CARROLL

IRVING, Texas (Bloomberg) -- Exxon Mobil Corp. is sticking to production targets established when oil traded for more than $100/bbl, signaling confidence that demand for crude-based fuels will continue to expand.

Exxon’s oil and natural gas output will grow by 2% this year and 3% annually in 2016 and 2017, the world’s largest energy producer by market value, said in a presentation to investors and analysts Wednesday. The outlook assumes an average crude price of $55/bbl.

The forecast is little changed from Exxon’s outlook a year ago. At the time, Brent crude, the benchmark for international oil sales, traded for about $108/bbl. The price has since fallen about 44% as global supplies grew faster than consumption, an imbalance Exxon Chairman and Chief Executive Officer Rex Tillerson suggested may not change any time soon.

“There’s a lot of supply out there and I don’t see a particularly healthy economy,” Tillerson said during the presentation at the New York Stock Exchange.

Crude output from U.S. shale fields probably won’t decline much, if at all, in response to tumbling oil prices, said Tillerson, who entered his 10th year as CEO in January. Politically volatile regions such as Libya and Iraq will add to the global glut as conditions improve, putting additional pressure on prices, he said.

Even in the current price environment, Exxon said it can continue to earn “attractive returns” with its onshore U.S. production.

Production growth will be driven by oil and so-called gas liquids such as propane, which will increase by 7% this year and 4% annually in 2016 and 2017, according to the presentation. Natural gas output will drop 2% annually this year and next before rising 4% in 2017, the Irving, Texas-based company said.