EU oil windfall tax will hurt investment: ExxonMobil

ExxonMobil lashed out at European governments for imposing windfall taxes on oil and gas companies, saying the effect will be to dampen investment when new supply is needed more than ever.

Last month, the company filed a lawsuit arguing that the EU's executive branch had no authority to impose the tax. ExxonMobil booked a $1.8bn charge in the fourth quarter related to windfall taxes.

For many in the industry, the additional levies "will be yet another reason to pull back on their investments in Europe," chief executive Darren Woods said today after the company posted record annual profit.

The EU ban on Russia's seaborne products imports, due to start on 5 February, could "potentially have some short-term implications," according to Woods. The ban will push up costs while supply chains are forced to re-adjust.

"I don't think there will a long-term impact, it will be a short-term one," Woods added. "It's just a question of how long it takes for the systems to rebalance."

ExxonMobil reiterated a goal to increase output from the Permian shale basin straddling western Texas and eastern New Mexico to 1mn b/d of oil equivalent (boe/d) by the end of 2027.

The company's output from the Permian hit a record 560,000 boe/d in the final quarter of last year, and production is seen reaching 600,000 boe/d in 2023.

Although inflation in the top US shale basin is "really hot," Woods said the company was succeeding in keeping costs under control across all its projects.

Higher output from the Permian and Guyana helped offset divestments and the loss of ExxonMobil's Russian assets last year.

The largest US oil producer increased gross production in Guyana by more than 160,000 b/d with the startup of the Liza Phase 2 project.

Its Permian net output increased by 90,000 boe/d as the company "captured the benefits of the strong market by liquidating the large inventory" of drilled but uncompleted wells built up during the pandemic.

As a result, total output for 2022 came in at 3.74mn boe/d, up slightly from 3.71mn boe/d the previous year.

"We've continued to strengthen our industry-leading portfolio and increased production from high-return, advantaged assets in Guyana and the Permian at a time when the world needed it most," Woods said.

ExxonMobil reported fourth-quarter profit of $12.75bn compared with a profit of $8.87bn in the year-earlier quarter. Revenue came in at $95.4bn, up from $84.97bn. Full-year profit soared to a record $55.7bn from $23bn in 2021.

Output in the final quarter of 2022 was little changed at 3.82mn boe/d from the same year-earlier period.

ExxonMobil forecast production will be flat in the first quarter compared with the last quarter of 2022, with growth in the Permian and elsewhere offsetting divestments.

By Stephen Cunningham