The energy industry is In A transition period. If fossil fuels are essential to the economy today, low-carbon energy will be vital in the future. No one knows how quickly this transition will occur, which creates considerable uncertainty.
ExxonMobilI is building its business to thrive in the energy transition. The energy company is investing heavily to provide the world with more low-cost oil and gas in the near term, while also preparing for a a low carbon future. ExxonMobil has a clear plan to grow shareholder value through 2030 and beyond, making it a energy stock that you can buy and hold with confidence for the long term.
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ExxonMobil recently raised its financial guidance for 2030. The oil giant now expects to generate $25 billion in profit growth and $35 billion in cash flow growth by 2030, compared to 2030. 2024 level, assuming constant margins and raw material prices. This represents an increase from previous forecasts of $20 billion and $30 billion respectively. Exxon expects to achieve an average annual earnings growth rate of approximately 13% and double-digit cash flow growth. The company can grow even faster on a per share basis thanks to its share buyback program.
A key aspect of Exxon’s strategy is to invest heavily in its preferred assets (lowest cost and highest margin). By 2030, production in favored countries upstream active (Permian, Guyana and LNG) should reach 65% of its total production. Exxon also plans to generate $9 billion in additional profits from its downstream product solutions platform by investing in competitive projects, deploying proprietary technology and realizing structural savings. High value-added products, including new activities such as Proxxima systems and carbon materials, should will contribute more than 40% to the growth potential of its product solutions segment by 2030. Finally, Exxon is in the early stages of building several low-carbon energy businesses, including carbon capture and storage (CCS). It is building the world’s first large-scale end-to-end CCS system along the U.S. Gulf Coast and advancing CCS-based low-carbon integration. data center projects.
Exxon’s disciplined investment strategy allows it to produce $145 billion in cumulative excess liquidity at $65 oil by 2030. This will give it the fund to continue increasing its dividend, which it has been doing for 43 right years. The oil giant also plans to buy back shares, with a buyback target of $20 billion in 2026.
Exxon’s investments over the next several years will lay the foundation for continued growth beyond 2030. The company has the upstream resources needed to continue increasing production to meet future demand for fossil fuels. Exxon can continue to develop its vast resources in the Permian Basin. He has the the biggest and the highest quality stock position in the sector, providing it with a runway for growth into the 2030s. Additionally, it plans to start new LNG projects in Papua New Guinea and Mozambique over the coming decade.
Meanwhile, Exxon sees enormous growth potential in expanding its product solutions platform over the next decade. New businesses, including Proxxima systems focused on carbon-based technology and materials, have the potential to generate $13 billion in additional profits by 2040.
Exxon also sees huge potential and optionality in low-carbon solutions. It is seeking approximately $20 billion in low-carbon investment opportunities through 2030, with 60% of these investments aimed at helping third-party customers reduce their emissions. In addition to the CCS, it invests in hydrogen, lithiumand other low-carbon solutions. Although some of these activities will require the development of favorable government policy and the formation of a broader market, they provide Exxon with a very long period of profitable growth in the decades to come.
ExxonMobil has significant visibility into its growth through 2030. A combination of investment in its advantaged upstream assets and expansion of its product solutions business should powering $25 billion in additional profits and $35 billion in additional cash flow over the next few years. Meanwhile, the energy company has ample fuel to continue its growth beyond 2030, particularly as it expands its low-carbon energy platforms. This combination of visible growth and optionality makes Exxon an energy stock you can buy and hold with confidence for the long term.
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Matt Dilallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the securities mentioned. The Motley Fool has a disclosure policy.
