Exxon Mobil plans 20-plus new projects

Oil giant Exxon Mobil Corp. said Wednesday it will spend some of its record profits on more than 20 new global projects in the next three years, investments expected to add 1 million oil-equivalent barrels a day to the company's volumes at peak production.

Irving, Texas-based Exxon Mobil, the world's largest publicly traded oil company, also said its project inventory at the end of 2006 has the potential to develop 24 billion oil-equivalent barrels. The company produced about 4.2 million barrels of oil equivalent a day in 2006.

Chairman and CEO Rex Tillerson said Exxon Mobil's capital spending would be about $20 billion a year through the end of the decade. The company's capital spending tab in 2006 was nearly $20 billion, up $2.2 billion from 2005.

"While opportunities and actual spending in any given year will likely vary depending on the pace and progress of individual projects, suffice it to say we expect very active levels of investment beyond the end of the decade," Tillerson told analysts during a presentation at the New York Stock Exchange.

Tillerson said the company, which produces about 3 percent of the world's oil, will continue to pursue projects in mature markets such as North America, Australia and the North Sea as well as growth regions such as the Middle East, Russia and West Africa.

In South America, Tillerson said the company had decided to turn over operational control of a joint venture project in Venezuela's oil-rich Orinoco River region to its partner, Petroleos de Venezuela SA, Venezuela's government-controlled oil company. Venezuelan President Hugo Chavez ordered by decree last week the takeover of oil projects run by foreign oil companies in the Orinoco region. He promised to occupy the fields in the region and fly the national flag over them by May 1.

But Tillerson said discussions continue over the ownership stake of its Venezuelan operations and other aspects of the arrangements. BP PLC, Chevron Corp., ConocoPhillips, France's Total SA and Norway's Statoil ASA also have projects in the country.

"There's a lot that has to be discussed with the Venezuelans yet," he said. "It'll be some time, I suspect, before we come to any conclusion on our continuing participation in the joint venture or our exit from the joint venture on terms that everybody is satisfied with."

Industry analysts and company executives question whether Petroleos de Venezuela has the money and capacity to take on the pricey, complex projects, which upgrade heavy tar-like crude into lighter, more marketable oils.

During the three-hour session on Wall Street, Tillerson pointed out the company's return on investment, noting Exxon Mobil led the industry in 2006 with return on capital employed of 32 percent, 50 percent higher than its competitors.

He also cited the company's aggressive stock repurchase efforts, saying annual share buybacks increased to $25 billion in 2006 from $4 billion in 2002, reducing the average number of shares outstanding by 12 percent during that period.

In a research note, Citigroup analyst Doug Leggate said as long as oil remains above $50 a barrel _ it was trading around $61 a barrel Wednesday _ Exxon Mobil likely can continue buying back shares to the tune of about $28 billion annually, adding 5 percent to underlying earnings per share.

Last month, Exxon Mobil posted the largest annual profit by a U.S. company _ $39.5 billion _ although its earnings for the last quarter of 2006 declined 4 percent to $10.25 billion.

The record annual earnings followed a year of extraordinarily high energy prices as crude oil topped $78 a barrel in the summer _ driving up average gasoline prices in the United States to more than $3 a gallon. Prices retreated later in the year.

The fourth-quarter decline reflected lower profits from Exxon's refining and marketing operations and a sharp drop-off in natural gas prices.

Exxon Mobil's full-year 2006 revenue was $377.6 billion. Wall Street analysts polled by Thomson Financial currently forecast those sales to grow to $387 billion in 2007.

Exxon shares rose 64 cents to close at $71.64 on the New York Stock Exchange. The shares have traded in a range of $56.64 to $79 in the past year.