Exxon to Spend $100 Million a Day to Drill for Oil, Gas

Exxon Mobile CEO Rex Tillerson
Rex Tillerson, chairman and chief executive officer of ExxonMobil Corp. Photographer: Joshua Roberts/Bloomberg

Exxon Mobil Corp., the world’s biggest company by market value, plans to spend about $100 million a day for the next half decade as it drills previously unreachable oil and natural gas deposits.

Exxon has budgeted $34 billion for capital projects this year, a 5.6 percent increase from 2010, and as much as $37 billion annually through 2015, Chief Executive Officer Rex Tillerson said today at an analyst meeting in New York. Exxon expects to boost oil and gas production by as much as 4 percent this year, the company said. Eleven new projects are scheduled to begin pumping oil or gas between now and 2013.

Exxon is spending more as the company expands drilling in geologic formations previously regarded as impenetrable and upgrades refining and chemical plants in Asia to supply the world’s fastest-growing energy markets. The company has 50 rigs drilling in fields considered unconventional prospects because of the intensive techniques required to harvest the oil or gas, Senior Vice President Andy Swiger said at the event.

“The step up in capital spending is almost entirely due to the level of spending we put towards unconventional,” Tillerson said.

About 80 percent of production from new wells between now and 2016 will consist of crude oil, the company said. Exxon’s exploration prospects range from Madagascar to Greenland to Vietnam.

Oil prices reached a 29-month high this week amid unrest in the Middle East. Crude oil futures for April delivery in New York traded at $104.69 at 1:26 p.m.

Outpacing Mexico’s Reserves

The company replaced 209 percent of the oil and gas pumped from its wells last year, partly through the $34.9 billion acquisition of Fort Worth, Texas-based XTO Energy Inc. Exxon had proved reserves equivalent to 24.8 billion barrels at the end of December, which exceeded the crude reserves of nations such as Mexico or Algeria. The company is still assessing gas fields acquired in the deal, Tillerson told reporters today.

Exxon fell 22 cents to $84.38 at 4 p.m. in composite trading on the New York Stock Exchange. The shares have gained 15 percent this year.

The company’s production rose 13 percent last year, the largest annual increase since Exxon’s 1999 acquisition of Mobil Corp.

Exxon, which traces its roots to the 1880s and John D. Rockefeller’s Standard Oil Trust, earned $15.50 in profit on each barrel of crude it produced in 2010, Tillerson said.

Exxon is awaiting U.S. regulatory approval to drill two wells at its deep-water Hadrian discovery in the Gulf of Mexico, the company said. Work on Hadrian was interrupted after the fatal explosion at BP Plc’s Macondo well in April prompted the government to halt all exploration drilling in waters deeper than 500 feet (152 meters).

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