Exxon faces a number of challenges, including investigations of its accounting and tax practices as well as lawsuits by cities and states seeking funds to pay for the effects of climate change.
But, its biggest problem is one the giant has seldom faced in its 148-year history: It isn’t making as much money as it used to.
Under former CEO Rex Tillerson, Exxon bet big hunting for oil in risky, expensive locales like the Russian Arctic. But as oil prices fell, those projects didn’t pay off the way Exxon had hoped.
As The Wall Street Journal reports, now the $350 billion Irving, Texas, company is returning to its former ways as it treads water: big, disciplined spending on prospects that make money at low oil prices.
The approach is a gamble, as many of Exxon’s competitors are transforming their businesses to move away from oil exploration, and have begun to spend carefully and diversify into renewable energy.
Exxon has been pledging to produce more oil and gas for years, the Wall Street Journal reports, but its output of about four million barrels a day is no higher today than it was after its merger with Mobil Corp. in 1999.
The centerpiece of CEO Darren Woods’ eight-year spending plan and turnaround effort is a major increase in drilling in Brazil, Papua New Guinea, Mozambique and Texas. These projects will make it possible for the company to produce an additional one million barrels of oil and gas a day, he said.
Next year, Exxon is set to spend $28 billion—45% more than in 2016. That’s a marked difference from rivals such as Chevron, which is holding investment levels flat this year and 18% below 2016 levels.
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