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2017-03-03 10:13:06
Darren Woods, Exxon’s New Chief, Begins to Make His Mark

HOUSTON — The executive wing of Exxon Mobil’s headquarters outside Dallas is nicknamed the God Pod because orders given by executives there can sometimes be as sharp as thunderbolts.

Darren W. Woods became the top god only two months ago, and he is just beginning to spread his wings. But there are hints of boldness mixed with the company’s traditional steadiness.

Even with a new administration in Washington far less interested in the problem of climate change, Mr. Woods has endorsed the Paris climate accord committing nations to cut greenhouse gas emissions and strongly reiterated Exxon’s support for a carbon tax. Weeks after he took over as chairman and chief executive from Rex W. Tillerson, who departed to become secretary of state, the company put a respected environmentalist on its board.

And perhaps most important, even as many of his top international competitors are cutting back investments, Mr. Woods is pushing ahead with promises of new drilling and refinery expansions.

“We are confident,” Mr. Woods said at Exxon’s annual analyst meeting at the New York Stock Exchange on Wednesday. “Our job is to compete and succeed in any market, irrespective of conditions or price.”

In his first major appearance since taking the reins, Mr. Woods spoke calmly and confidently to reassure investors by detailing a hefty increase in capital and exploration spending this year to expand reserves and production.

Mr. Woods did not announce any major shift in strategy. But he did offer details for the company’s ambitious plans to invest heavily through the end of the decade across the globe, from the shale fields of West Texas to deep waters off the coast of Guyana, with major production projects spanning Angola, Canada, Russia, Qatar and the United Arab Emirates.

All told, he announced capital and exploration expenses of $22 billion in 2017, and those expenses are to expand to an average of $25 billion annually through 2020. That should help the company substantially increase reserves, and stabilize and potentially increase daily production of oil and natural gas to as much as 4.4 million barrels by 2020 from just over four million barrels now.

Mr. Woods takes over the top position in the company at a delicate time. Only seven years ago, Exxon had over $45 billion in cash, but it has been burdened by enough debt to lose its AAA credit rating last spring. Its annual profit of $7.8 billion last year was a small fraction of what investors had grown accustomed to.

“Exxon’s balance sheet is the worst in 35 years,” said Fadel Gheit, a senior oil company analyst at Oppenheimer & Company. “Their financial situation has deteriorated rapidly over the last five years, and this in my view is alarming.”

Mr. Woods added notes of caution in his presentation. Even with the partial recovery of oil prices in recent months, Mr. Woods suggested that many unpredictable market factors could take commodity prices higher or lower.

“Global supply remains dynamic, new projects are coming on line, OPEC production levels are changing, geopolitical uncertainties remain,” he said. “We continue to expect to see volatility in the markets.”

The company’s recent faltering fortunes were underscored last month by its removal of several billion barrels of Canadian oil sands from its books, an acknowledgment that the resource cannot be profitably produced anywhere near today’s commodity prices for the foreseeable future.

But Mr. Woods said Exxon’s superior and diverse assets would enable it to thrive in the long run. And he may have luck on his side. In recent weeks, Exxon has made several announcements that bode well. It is the leader in drilling in the deep waters off Guyana, and early well results suggest one of the biggest oil finds in decades. Before leaving for the State Department, Mr. Tillerson negotiated the acquisition of a giant field in the Permian Basin, which straddles West Texas and New Mexico, that should add more than three billion barrels of accessible reserves to Exxon Mobil’s inventory.

The company has also announced the discovery of a large oil field off the shores of Nigeria, started drilling in Liberia, increased investments in gas production and exports in Papua New Guinea and expanded refineries in Singapore and the Netherlands. Even though commodity prices are lower today than when some of the projects were first planned, many energy experts say they highlight Exxon’s resilience.

“The future looks bright for Exxon Mobil regardless of potential oil price volatility or economic uncertainty,” said Osmar Abib, global head of oil and gas investment banking at Credit Suisse. He added that Mr. Woods was taking over a “formidable competitor” with the good fortune to have a powerful combination of “high-quality rocks, technology and management depth.”

Though Exxon has yet to hint at it, some energy experts are predicting that the company still has enough cash and borrowing ability to take part in the initial public offering for a piece of Saudi Aramco, the state oil company, as a way to garner a large dividend stream and perhaps even acquire new production possibilities.

Mr. Woods, a 52-year-old electrical engineer, has been at Exxon for a quarter-century, holding prominent positions in its refining and chemical businesses. Now he is trying to put his imprint on a company that shifts course slowly.

Mr. Tillerson’s legacy was the acquisition of XTO, a company specializing in shale production, aligning Exxon with a future in which natural gas could dominate fossil fuels. He also cautiously moved the company toward more public acceptance of climate-change science and support for a carbon tax. At the same time, he adamantly defended Exxon against allegations that it had improperly promoted efforts to question climate science even as its own scientists were warning about the dangers of greenhouse gas emissions.

While Mr. Tillerson was a stern presence, Mr. Woods is more of a happy warrior, known as a graceful glad-hander at project openings. His diplomatic skills could work well in places like Guyana and Nigeria.

Under Mr. Woods, the company has bolstered its environmental image by adding Susan Avery, a climate scientist, to its board. In addition, company executives say they expect advances in their efforts to produce advanced biofuels, better batteries and carbon capture and sequestration, technologies that could guarantee the dominance of fossil fuel energy well into the future.

“We have a commitment to fundamental science,” Mr. Woods told the investors. “As society looks for affordable energy solutions with lower greenhouse gas emissions, advancement of technology will be critical.”