US Oil, Gas Production to Climb While US Energy Consumption Declines

U.S. oil and gas production will continue to rise through 2040 from 2010 levels as unconventional oil and gas resources and production from the deepwater Gulf of Mexico come online, while U.S. energy consumption is forecast to decline during the same time period, ExxonMobil Corp. reported in its 2013 energy outlook.

U.S. oil and gas production has grown to its highest level in three decades, thanks to technological advances that have allowed the oil and gas industry to access deepwater resources as well as unlock unconventional oil and gas resources such as the Bakken oil play in North Dakota, according to ExxonMobil's energy outlook.

The projected 6 percent decline between 2010 and 2040, or an average .2 percent decline per year, in U.S. energy consumption will occur even as the U.S. population grows an average of .7 percent a year from 2000 through 2040, or 20 percent more people by 2040, and the nation's gross domestic product grows an average 2.3 percent a year during that time period, basically doubling the economic output of the United States, said William Colton, vice president of corporate strategic planning at ExxonMobil, at a Wednesday presentation at Rice University in Houston. The findings of ExxonMobil's first U.S.-focused edition of its energy outlook are "pretty startling", said Colton, and indicate a more efficient use of energy across the board, from transportation to office buildings to industrial applications.

"This is an incredible achievement, a great accomplishment and good for the economy," Colton commented, who noted that the outlook for the United States has never been more positive in terms of geologic and human resources.

Energy demand in countries outside the United States is forecast to grow 35 percent through 2040, mostly driven by population and economic growth in developing countries such as China and India as well as fast-developing countries in Asia Pacific, Africa, the Middle East and Latin America, Colton noted. During the 2010 to 2040 timeframe, the world population will grow to 9 billion and the global economy will double.

"It's really about standard of living – they want safe homes, cars and refrigerators, but all these require energy," said Colton.

Electricity demand will be the single biggest driver of energy in the United States, with 30 percent growth by 2040, followed by the transportation and industrial sectors. An examination of the capital, fuel and operating costs for gas, coal, nuclear, wind and solar shows natural gas and coal as the most economic for power generation. When accounting for a $60/ton cost for carbon dioxide emissions, gas and nuclear become the most cost efficient. While the straight economics on nuclear power look great, facility siting and social issues, particularly in a post-Fukushimu world, mean limited options for nuclear exist.

ExxonMobil forecasts flat demand in the U.S. transportation sector. In the transportation sector, fuel demand for light-duty vehicles will fall even as the number of light-duty vehicles on U.S. roads grow thanks to better fuel economy and smaller size of these vehicles. Meanwhile, fuel demand will grow for heavy-duty vehicles, and full hybrid vehicles such as the Toyota Prius will become more common on U.S. roads, said Colton. Most of the efficiency is being driven by government policy, such as the CAFÉ standards in the United States.

U.S. natural gas production is now at an all-time high thanks to shale boom, and is expected to rise by 45 percent between 2010 and 2040. By 2040, nearly 80 percent of North America gas supplies will be produced from local unconventional resources, according to ExxonMobil. Even with the projected increase in gas production through 2040, North America will continue to have significant gas resources in the ground, an estimated 100 years supply at current consumption rates; this figure could potentially grow at technology advances.

After decades of relatively flat production, North America oil and liquids output is expected to grow by 40 percent from 2010 to 2040. Conventional crude production is expected to decline, while production from unconventional resources is expected to rise, ExxonMobil said in its report. The biggest contributor to unconventional oil production will be from Canadian oil sands, which is expected to produce approximately 4.5 million barrels of oil per day by 2040. A doubling of deepwater production, mostly in the U.S. Gulf of Mexico, will be another major contributor in oil production gains.

Even though North America is approaching a time when it produces more energy than it consumes, the region will still benefit from access to the global energy market.

"The value of free trade –whether imports or exports – is a fundamental principle of modern economics, and is critical to U.S. energy security, economic growth and competitiveness in the global marketplace," ExxonMobil said in its U.S. energy outlook.

The combination of steep gains in energy production and modest declines in U.S. consumption – will allow North America to become a net energy exporter by around 2025. The United States' changing role as a net energy exporter also will bring significant benefits to the U.S. economy, including those associated with liquefied natural gas exports, such as increased manufacturing activity, new jobs, lower energy costs for businesses and consumers, and billions in taxes and government revenue, ExxonMobil said in the report.

Reduced U.S. energy consumption also will provide environmental benefits, particularly when combined with the United States' shift away from coal to natural gas. ExxonMobil forecasts U.S. carbon dioxide emissions by 2040 to fall to levels not seen since the 1970s.

Events such as last year's Arab spring and the January terrorist takeover of the In Amenas Algeria gas production plant are examples of some of the geopolitical challenges that oil and gas companies' operating internationally must manage. However, North American regulatory uncertainty, such as whether the Keystone XL pipeline will be approved, also poses a geopolitical risk that should not be discounted, said Kenneth Cohen, vice president of public and government affairs at ExxonMobil.

"The above ground risk equals or exceeds the geologic risk" faced by oil and gas companies operating in the United States, said Cohen.

ExxonMobil welcomes effective, science-based regulations, Colton said, but sees state-based regulations for U.S. onshore shale production as the best solution. The company remains optimistic on the outlook for U.S. shale drilling, despite the 2014 release of the U.S. Environmental Protection Agency's (EPA) study next year of hydraulic fracturing's impact on U.S. water supplies. Additionally, nine other government agencies are conducting their own studies into hydraulic fracturing.

ExxonMobil expects to remain active in the U.S. Gulf of Mexico (GOM), despite its recent divestment of 20 Gulf of Mexico blocks. The amount of resources available in the deepwater GOM represents the equivalent of Saudi Arabia production, Colton said. The company has four important projects underway in the GOM, including Lucius and Hadrian South, which are expected to come online in 2014. ExxonMobil is also pursuing the Hadrian North and Julia projects in the GOM, according to the company's analyst meeting presentation earlier this month.

Despite its lack of success in exploring Poland's shale gas resource potential, the company is well-positioned to explore global shale assets, Colton said, noting that shale exploration outside the United States remains in its early days, meaning it's too early to forecast the outlook for international shale resources.

ExxonMobil's global production forecast does not include methane hydrates, which Japan has recently conducted production tests for and is viewed as the next big thing in the oil and gas industry. Methane hydrates lie on the horizon, but Colton said ExxonMobil researchers are "keenly aware of them."

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here

US Oil, Gas Production to Climb While US Energy Consumption Declines

U.S. oil and gas production will continue to rise through 2040 from 2010 levels as unconventional oil and gas resources and production from the deepwater Gulf of Mexico come online, while U.S. energy consumption is forecast to decline during the same time period, ExxonMobil Corp. reported in its 2013 energy outlook.

U.S. oil and gas production has grown to its highest level in three decades, thanks to technological advances that have allowed the oil and gas industry to access deepwater resources as well as unlock unconventional oil and gas resources such as the Bakken oil play in North Dakota, according to ExxonMobil's energy outlook.

The projected 6 percent decline between 2010 and 2040, or an average .2 percent decline per year, in U.S. energy consumption will occur even as the U.S. population grows an average of .7 percent a year from 2000 through 2040, or 20 percent more people by 2040, and the nation's gross domestic product grows an average 2.3 percent a year during that time period, basically doubling the economic output of the United States, said William Colton, vice president of corporate strategic planning at ExxonMobil, at a Wednesday presentation at Rice University in Houston. The findings of ExxonMobil's first U.S.-focused edition of its energy outlook are "pretty startling", said Colton, and indicate a more efficient use of energy across the board, from transportation to office buildings to industrial applications.

"This is an incredible achievement, a great accomplishment and good for the economy," Colton commented, who noted that the outlook for the United States has never been more positive in terms of geologic and human resources.

Energy demand in countries outside the United States is forecast to grow 35 percent through 2040, mostly driven by population and economic growth in developing countries such as China and India as well as fast-developing countries in Asia Pacific, Africa, the Middle East and Latin America, Colton noted. During the 2010 to 2040 timeframe, the world population will grow to 9 billion and the global economy will double.

"It's really about standard of living – they want safe homes, cars and refrigerators, but all these require energy," said Colton.

Electricity demand will be the single biggest driver of energy in the United States, with 30 percent growth by 2040, followed by the transportation and industrial sectors. An examination of the capital, fuel and operating costs for gas, coal, nuclear, wind and solar shows natural gas and coal as the most economic for power generation. When accounting for a $60/ton cost for carbon dioxide emissions, gas and nuclear become the most cost efficient. While the straight economics on nuclear power look great, facility siting and social issues, particularly in a post-Fukushimu world, mean limited options for nuclear exist.

ExxonMobil forecasts flat demand in the U.S. transportation sector. In the transportation sector, fuel demand for light-duty vehicles will fall even as the number of light-duty vehicles on U.S. roads grow thanks to better fuel economy and smaller size of these vehicles. Meanwhile, fuel demand will grow for heavy-duty vehicles, and full hybrid vehicles such as the Toyota Prius will become more common on U.S. roads, said Colton. Most of the efficiency is being driven by government policy, such as the CAFÉ standards in the United States.

U.S. natural gas production is now at an all-time high thanks to shale boom, and is expected to rise by 45 percent between 2010 and 2040. By 2040, nearly 80 percent of North America gas supplies will be produced from local unconventional resources, according to ExxonMobil. Even with the projected increase in gas production through 2040, North America will continue to have significant gas resources in the ground, an estimated 100 years supply at current consumption rates; this figure could potentially grow at technology advances.

After decades of relatively flat production, North America oil and liquids output is expected to grow by 40 percent from 2010 to 2040. Conventional crude production is expected to decline, while production from unconventional resources is expected to rise, ExxonMobil said in its report. The biggest contributor to unconventional oil production will be from Canadian oil sands, which is expected to produce approximately 4.5 million barrels of oil per day by 2040. A doubling of deepwater production, mostly in the U.S. Gulf of Mexico, will be another major contributor in oil production gains.

Even though North America is approaching a time when it produces more energy than it consumes, the region will still benefit from access to the global energy market.

"The value of free trade –whether imports or exports – is a fundamental principle of modern economics, and is critical to U.S. energy security, economic growth and competitiveness in the global marketplace," ExxonMobil said in its U.S. energy outlook.

The combination of steep gains in energy production and modest declines in U.S. consumption – will allow North America to become a net energy exporter by around 2025. The United States' changing role as a net energy exporter also will bring significant benefits to the U.S. economy, including those associated with liquefied natural gas exports, such as increased manufacturing activity, new jobs, lower energy costs for businesses and consumers, and billions in taxes and government revenue, ExxonMobil said in the report.

Reduced U.S. energy consumption also will provide environmental benefits, particularly when combined with the United States' shift away from coal to natural gas. ExxonMobil forecasts U.S. carbon dioxide emissions by 2040 to fall to levels not seen since the 1970s.

Events such as last year's Arab spring and the January terrorist takeover of the In Amenas Algeria gas production plant are examples of some of the geopolitical challenges that oil and gas companies' operating internationally must manage. However, North American regulatory uncertainty, such as whether the Keystone XL pipeline will be approved, also poses a geopolitical risk that should not be discounted, said Kenneth Cohen, vice president of public and government affairs at ExxonMobil.

"The above ground risk equals or exceeds the geologic risk" faced by oil and gas companies operating in the United States, said Cohen.

ExxonMobil welcomes effective, science-based regulations, Colton said, but sees state-based regulations for U.S. onshore shale production as the best solution. The company remains optimistic on the outlook for U.S. shale drilling, despite the 2014 release of the U.S. Environmental Protection Agency's (EPA) study next year of hydraulic fracturing's impact on U.S. water supplies. Additionally, nine other government agencies are conducting their own studies into hydraulic fracturing.

ExxonMobil expects to remain active in the U.S. Gulf of Mexico (GOM), despite its recent divestment of 20 Gulf of Mexico blocks. The amount of resources available in the deepwater GOM represents the equivalent of Saudi Arabia production, Colton said. The company has four important projects underway in the GOM, including Lucius and Hadrian South, which are expected to come online in 2014. ExxonMobil is also pursuing the Hadrian North and Julia projects in the GOM, according to the company's analyst meeting presentation earlier this month.

Despite its lack of success in exploring Poland's shale gas resource potential, the company is well-positioned to explore global shale assets, Colton said, noting that shale exploration outside the United States remains in its early days, meaning it's too early to forecast the outlook for international shale resources.

ExxonMobil's global production forecast does not include methane hydrates, which Japan has recently conducted production tests for and is viewed as the next big thing in the oil and gas industry. Methane hydrates lie on the horizon, but Colton said ExxonMobil researchers are "keenly aware of them."

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here

US Oil, Gas Production to Climb While US Energy Consumption Declines

U.S. oil and gas production will continue to rise through 2040 from 2010 levels as unconventional oil and gas resources and production from the deepwater Gulf of Mexico come online, while U.S. energy consumption is forecast to decline during the same time period, ExxonMobil Corp. reported in its 2013 energy outlook.

U.S. oil and gas production has grown to its highest level in three decades, thanks to technological advances that have allowed the oil and gas industry to access deepwater resources as well as unlock unconventional oil and gas resources such as the Bakken oil play in North Dakota, according to ExxonMobil's energy outlook.

The projected 6 percent decline between 2010 and 2040, or an average .2 percent decline per year, in U.S. energy consumption will occur even as the U.S. population grows an average of .7 percent a year from 2000 through 2040, or 20 percent more people by 2040, and the nation's gross domestic product grows an average 2.3 percent a year during that time period, basically doubling the economic output of the United States, said William Colton, vice president of corporate strategic planning at ExxonMobil, at a Wednesday presentation at Rice University in Houston. The findings of ExxonMobil's first U.S.-focused edition of its energy outlook are "pretty startling", said Colton, and indicate a more efficient use of energy across the board, from transportation to office buildings to industrial applications.

"This is an incredible achievement, a great accomplishment and good for the economy," Colton commented, who noted that the outlook for the United States has never been more positive in terms of geologic and human resources.

Energy demand in countries outside the United States is forecast to grow 35 percent through 2040, mostly driven by population and economic growth in developing countries such as China and India as well as fast-developing countries in Asia Pacific, Africa, the Middle East and Latin America, Colton noted. During the 2010 to 2040 timeframe, the world population will grow to 9 billion and the global economy will double.

"It's really about standard of living – they want safe homes, cars and refrigerators, but all these require energy," said Colton.

Electricity demand will be the single biggest driver of energy in the United States, with 30 percent growth by 2040, followed by the transportation and industrial sectors. An examination of the capital, fuel and operating costs for gas, coal, nuclear, wind and solar shows natural gas and coal as the most economic for power generation. When accounting for a $60/ton cost for carbon dioxide emissions, gas and nuclear become the most cost efficient. While the straight economics on nuclear power look great, facility siting and social issues, particularly in a post-Fukushimu world, mean limited options for nuclear exist.

ExxonMobil forecasts flat demand in the U.S. transportation sector. In the transportation sector, fuel demand for light-duty vehicles will fall even as the number of light-duty vehicles on U.S. roads grow thanks to better fuel economy and smaller size of these vehicles. Meanwhile, fuel demand will grow for heavy-duty vehicles, and full hybrid vehicles such as the Toyota Prius will become more common on U.S. roads, said Colton. Most of the efficiency is being driven by government policy, such as the CAFÉ standards in the United States.

U.S. natural gas production is now at an all-time high thanks to shale boom, and is expected to rise by 45 percent between 2010 and 2040. By 2040, nearly 80 percent of North America gas supplies will be produced from local unconventional resources, according to ExxonMobil. Even with the projected increase in gas production through 2040, North America will continue to have significant gas resources in the ground, an estimated 100 years supply at current consumption rates; this figure could potentially grow at technology advances.

After decades of relatively flat production, North America oil and liquids output is expected to grow by 40 percent from 2010 to 2040. Conventional crude production is expected to decline, while production from unconventional resources is expected to rise, ExxonMobil said in its report. The biggest contributor to unconventional oil production will be from Canadian oil sands, which is expected to produce approximately 4.5 million barrels of oil per day by 2040. A doubling of deepwater production, mostly in the U.S. Gulf of Mexico, will be another major contributor in oil production gains.

Even though North America is approaching a time when it produces more energy than it consumes, the region will still benefit from access to the global energy market.

"The value of free trade –whether imports or exports – is a fundamental principle of modern economics, and is critical to U.S. energy security, economic growth and competitiveness in the global marketplace," ExxonMobil said in its U.S. energy outlook.

The combination of steep gains in energy production and modest declines in U.S. consumption – will allow North America to become a net energy exporter by around 2025. The United States' changing role as a net energy exporter also will bring significant benefits to the U.S. economy, including those associated with liquefied natural gas exports, such as increased manufacturing activity, new jobs, lower energy costs for businesses and consumers, and billions in taxes and government revenue, ExxonMobil said in the report.

Reduced U.S. energy consumption also will provide environmental benefits, particularly when combined with the United States' shift away from coal to natural gas. ExxonMobil forecasts U.S. carbon dioxide emissions by 2040 to fall to levels not seen since the 1970s.

Events such as last year's Arab spring and the January terrorist takeover of the In Amenas Algeria gas production plant are examples of some of the geopolitical challenges that oil and gas companies' operating internationally must manage. However, North American regulatory uncertainty, such as whether the Keystone XL pipeline will be approved, also poses a geopolitical risk that should not be discounted, said Kenneth Cohen, vice president of public and government affairs at ExxonMobil.

"The above ground risk equals or exceeds the geologic risk" faced by oil and gas companies operating in the United States, said Cohen.

ExxonMobil welcomes effective, science-based regulations, Colton said, but sees state-based regulations for U.S. onshore shale production as the best solution. The company remains optimistic on the outlook for U.S. shale drilling, despite the 2014 release of the U.S. Environmental Protection Agency's (EPA) study next year of hydraulic fracturing's impact on U.S. water supplies. Additionally, nine other government agencies are conducting their own studies into hydraulic fracturing.

ExxonMobil expects to remain active in the U.S. Gulf of Mexico (GOM), despite its recent divestment of 20 Gulf of Mexico blocks. The amount of resources available in the deepwater GOM represents the equivalent of Saudi Arabia production, Colton said. The company has four important projects underway in the GOM, including Lucius and Hadrian South, which are expected to come online in 2014. ExxonMobil is also pursuing the Hadrian North and Julia projects in the GOM, according to the company's analyst meeting presentation earlier this month.

Despite its lack of success in exploring Poland's shale gas resource potential, the company is well-positioned to explore global shale assets, Colton said, noting that shale exploration outside the United States remains in its early days, meaning it's too early to forecast the outlook for international shale resources.

ExxonMobil's global production forecast does not include methane hydrates, which Japan has recently conducted production tests for and is viewed as the next big thing in the oil and gas industry. Methane hydrates lie on the horizon, but Colton said ExxonMobil researchers are "keenly aware of them."

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here

Earnings Rise, Oil Production Declines for ExxonMobil

ExxonMobil recorded higher fourth quarter and full year 2012 earnings, but saw its upstream earnings and oil production decline as it ramped up 2012 capital and exploration expenditures to a record level.

The Irving, Texas-based oil major recorded fourth quarter 2012 earnings of more than $9.9 billion, up 6 percent from the fourth quarter of 2011, and full year 2012 earnings of $44.9 billion, up 9 percent from 2011, and record earnings per share of $9.70.

The company spent a record $39.8 billion on expenditures as it pursues opportunities to find and produce new supplies of oil and natural gas to meet global energy demand.

"Energy is fundamental to economic growth and improved living standards," said Chairman Rex W. Tillerson in a statement Friday. "ExxonMobil's strong financial performance enables continued investment in new energy supplies, which creates jobs and supports economic expansion."

While ExxonMobil's fourth quarter earnings were up, the company's upstream earnings for fourth quarter 2012 were approximately $7.7 billion, down approximately $1.1 billion from fourth quarter 2011. Fourth quarter earnings were impacted by lower liquids realizations partially offset by improved natural gas realizations, production volume and mix and lower gains from asset sales.

U.S. upstream earnings for fourth quarter 2012 rose $420 million from fourth quarter 2011 to $1.6 billion, while non-upstream earnings declined approximately $1.5 billion from the previous year to $6.1 billion.

Fourth quarter downstream earnings were approximately $1.8 billion, up $1.3 billion from the same quarter a year ago, on stronger refining margins. U.S. downstream earnings rose $667 million to $697 million, while non-U.S. downstream earnings rose $676 million to approximately $1.1 billion.

ExxonMobil's full year 2012 earnings included $9.9 billion of divestment and restructuring gains, mainly from restricting of its Japan-based operations, with $6.5 billion. But the company's upstream earnings for 2012 of $29.8 billion were down $4.5 billion from 2011 due to a number of factors, including lower liquids realizations, production volume and mix effects, higher operating expenses, lower asset sale gains, unfavorable tax items and negative foreign exchange effects.

ExxonMobil saw its full year 2012 upstream earnings decline by $4.5 billion from 2011 to approximately $29.9 billion. The company recorded U.S. upstream operation earnings of $3.9 billion, down approximately $1.2 billion from 2011, and earnings outside the U.S. of $25.9 billion, down $3.3 billion.

The company's U.S. and international downstream businesses recorded higher earnings due to stronger refining-driven margins and the $5.3 billion gain associated with ExxonMobil's restructuring in Japan and other divestment gains. Downstream earnings grew approximately $8.7 billion from 2011 to $13.2 billion in 2012, with U.S. downstream earnings of approximately $3.5 billion, up $1.3 billion from 2011, and non-U.S. downstream earnings of $9.6 billion, up $7.4 billion from 2011.

Excluding entitlement volumes, OPEC quota effects and divestments, ExxonMobil's fourth quarter 2012 production declined by 2.1 percent from fourth quarter 2011. Fourth quarter gas production was down 2.8 percent, excluding entitlement volumes and divestments, as field decline was partially offset by higher demand and lower downtime.

The company's 2012 full year oil and gas production was also down by 1.7 percent and 1.9 percent respectively.

Despite lower oil production, ExxonMobil noted that its participated in three major liquids project start-ups in West Africa last year with capacity of 350,000 gross barrels of oil per day.

The company also announced early January that it would move forward with the Hebron oil field development projects offshore eastern Canada. ExxonMobil will spend as estimated $14 billion on the project, which will involve constructing a gravity-based structure to recover more than 700 million barrels of oil.

ExxonMobil also started operations at one of the world's largest ethylene steam crackers, the centerpiece of the company's multi-billion dollar expansion at its Singapore petrochemical complex. The expansion will add 2.6 million tonnes per year of new finished product capacity.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here

Earnings Rise, Oil Production Declines for ExxonMobil

ExxonMobil recorded higher fourth quarter and full year 2012 earnings, but saw its upstream earnings and oil production decline as it ramped up 2012 capital and exploration expenditures to a record level.

The Irving, Texas-based oil major recorded fourth quarter 2012 earnings of more than $9.9 billion, up 6 percent from the fourth quarter of 2011, and full year 2012 earnings of $44.9 billion, up 9 percent from 2011, and record earnings per share of $9.70.

The company spent a record $39.8 billion on expenditures as it pursues opportunities to find and produce new supplies of oil and natural gas to meet global energy demand.

"Energy is fundamental to economic growth and improved living standards," said Chairman Rex W. Tillerson in a statement Friday. "ExxonMobil's strong financial performance enables continued investment in new energy supplies, which creates jobs and supports economic expansion."

While ExxonMobil's fourth quarter earnings were up, the company's upstream earnings for fourth quarter 2012 were approximately $7.7 billion, down approximately $1.1 billion from fourth quarter 2011. Fourth quarter earnings were impacted by lower liquids realizations partially offset by improved natural gas realizations, production volume and mix and lower gains from asset sales.

U.S. upstream earnings for fourth quarter 2012 rose $420 million from fourth quarter 2011 to $1.6 billion, while non-upstream earnings declined approximately $1.5 billion from the previous year to $6.1 billion.

Fourth quarter downstream earnings were approximately $1.8 billion, up $1.3 billion from the same quarter a year ago, on stronger refining margins. U.S. downstream earnings rose $667 million to $697 million, while non-U.S. downstream earnings rose $676 million to approximately $1.1 billion.

ExxonMobil's full year 2012 earnings included $9.9 billion of divestment and restructuring gains, mainly from restricting of its Japan-based operations, with $6.5 billion. But the company's upstream earnings for 2012 of $29.8 billion were down $4.5 billion from 2011 due to a number of factors, including lower liquids realizations, production volume and mix effects, higher operating expenses, lower asset sale gains, unfavorable tax items and negative foreign exchange effects.

ExxonMobil saw its full year 2012 upstream earnings decline by $4.5 billion from 2011 to approximately $29.9 billion. The company recorded U.S. upstream operation earnings of $3.9 billion, down approximately $1.2 billion from 2011, and earnings outside the U.S. of $25.9 billion, down $3.3 billion.

The company's U.S. and international downstream businesses recorded higher earnings due to stronger refining-driven margins and the $5.3 billion gain associated with ExxonMobil's restructuring in Japan and other divestment gains. Downstream earnings grew approximately $8.7 billion from 2011 to $13.2 billion in 2012, with U.S. downstream earnings of approximately $3.5 billion, up $1.3 billion from 2011, and non-U.S. downstream earnings of $9.6 billion, up $7.4 billion from 2011.

Excluding entitlement volumes, OPEC quota effects and divestments, ExxonMobil's fourth quarter 2012 production declined by 2.1 percent from fourth quarter 2011. Fourth quarter gas production was down 2.8 percent, excluding entitlement volumes and divestments, as field decline was partially offset by higher demand and lower downtime.

The company's 2012 full year oil and gas production was also down by 1.7 percent and 1.9 percent respectively.

Despite lower oil production, ExxonMobil noted that its participated in three major liquids project start-ups in West Africa last year with capacity of 350,000 gross barrels of oil per day.

The company also announced early January that it would move forward with the Hebron oil field development projects offshore eastern Canada. ExxonMobil will spend as estimated $14 billion on the project, which will involve constructing a gravity-based structure to recover more than 700 million barrels of oil.

ExxonMobil also started operations at one of the world's largest ethylene steam crackers, the centerpiece of the company's multi-billion dollar expansion at its Singapore petrochemical complex. The expansion will add 2.6 million tonnes per year of new finished product capacity.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here

Earnings Rise, Oil Production Declines for ExxonMobil

ExxonMobil recorded higher fourth quarter and full year 2012 earnings, but saw its upstream earnings and oil production decline as it ramped up 2012 capital and exploration expenditures to a record level.

The Irving, Texas-based oil major recorded fourth quarter 2012 earnings of more than $9.9 billion, up 6 percent from the fourth quarter of 2011, and full year 2012 earnings of $44.9 billion, up 9 percent from 2011, and record earnings per share of $9.70.

The company spent a record $39.8 billion on expenditures as it pursues opportunities to find and produce new supplies of oil and natural gas to meet global energy demand.

"Energy is fundamental to economic growth and improved living standards," said Chairman Rex W. Tillerson in a statement Friday. "ExxonMobil's strong financial performance enables continued investment in new energy supplies, which creates jobs and supports economic expansion."

While ExxonMobil's fourth quarter earnings were up, the company's upstream earnings for fourth quarter 2012 were approximately $7.7 billion, down approximately $1.1 billion from fourth quarter 2011. Fourth quarter earnings were impacted by lower liquids realizations partially offset by improved natural gas realizations, production volume and mix and lower gains from asset sales.

U.S. upstream earnings for fourth quarter 2012 rose $420 million from fourth quarter 2011 to $1.6 billion, while non-upstream earnings declined approximately $1.5 billion from the previous year to $6.1 billion.

Fourth quarter downstream earnings were approximately $1.8 billion, up $1.3 billion from the same quarter a year ago, on stronger refining margins. U.S. downstream earnings rose $667 million to $697 million, while non-U.S. downstream earnings rose $676 million to approximately $1.1 billion.

ExxonMobil's full year 2012 earnings included $9.9 billion of divestment and restructuring gains, mainly from restricting of its Japan-based operations, with $6.5 billion. But the company's upstream earnings for 2012 of $29.8 billion were down $4.5 billion from 2011 due to a number of factors, including lower liquids realizations, production volume and mix effects, higher operating expenses, lower asset sale gains, unfavorable tax items and negative foreign exchange effects.

ExxonMobil saw its full year 2012 upstream earnings decline by $4.5 billion from 2011 to approximately $29.9 billion. The company recorded U.S. upstream operation earnings of $3.9 billion, down approximately $1.2 billion from 2011, and earnings outside the U.S. of $25.9 billion, down $3.3 billion.

The company's U.S. and international downstream businesses recorded higher earnings due to stronger refining-driven margins and the $5.3 billion gain associated with ExxonMobil's restructuring in Japan and other divestment gains. Downstream earnings grew approximately $8.7 billion from 2011 to $13.2 billion in 2012, with U.S. downstream earnings of approximately $3.5 billion, up $1.3 billion from 2011, and non-U.S. downstream earnings of $9.6 billion, up $7.4 billion from 2011.

Excluding entitlement volumes, OPEC quota effects and divestments, ExxonMobil's fourth quarter 2012 production declined by 2.1 percent from fourth quarter 2011. Fourth quarter gas production was down 2.8 percent, excluding entitlement volumes and divestments, as field decline was partially offset by higher demand and lower downtime.

The company's 2012 full year oil and gas production was also down by 1.7 percent and 1.9 percent respectively.

Despite lower oil production, ExxonMobil noted that its participated in three major liquids project start-ups in West Africa last year with capacity of 350,000 gross barrels of oil per day.

The company also announced early January that it would move forward with the Hebron oil field development projects offshore eastern Canada. ExxonMobil will spend as estimated $14 billion on the project, which will involve constructing a gravity-based structure to recover more than 700 million barrels of oil.

ExxonMobil also started operations at one of the world's largest ethylene steam crackers, the centerpiece of the company's multi-billion dollar expansion at its Singapore petrochemical complex. The expansion will add 2.6 million tonnes per year of new finished product capacity.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

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