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Exxon will likely still be producing oil & gas in 2050: Exxon CEO

Exxon Mobil (XOM) has completed an acquisition of Pioneer Natural Resources (PXD) in one of the largest oil deals in decades. Chairman and CEO Darren Woods sits down with Yahoo Finance's Brian Sozzi and Akiko Fujita to discuss the acquisition and the future of Exxon Mobil.

Woods explains that the acquisition created an opportunity "to deliver more value than what either company could do on its own." He adds that with Pioneer's technology, Exxon Mobil will be able to produce more oil at a lower cost.

The CEO expects the acquisition to generate an annual $2 billion in synergies. He adds that with new technologies on the horizon and innovations in the field, Exxon will likely continue producing oil and gas in 2050.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

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Be sure to check out more from Yahoo Finance's coverage of the 2024 Milken Institute Global Conference.

This post was written by Melanie Riehl

Video transcript

A big moment in the history of Exxon having closed its pioneer deal.Let's bring in Exxon Chair and CEO Darren Woods.Darren.Good to see you Appreciate it.Thanks for having me.So just close that pioneer deal.What should investors expect from an earnings power standpoint over the next couple of years, when we were looking at an acquisition, what we talked about was every opportunity has to be delivered more value than what either company could do on its own and what we found with pioneers an opportunity to take the technology, the development of techniques that we've come up with in unconventional space take pioneers understanding the resource to base them and their acres and together put those two companies together, produce more oil at a lower cost, which is good for consumers, good for the economy and do it in a more environmentally responsible way.We're taking their 20,050 net zero pledge and converting it into a 35 net zero plan and so good for the US economy.Good for US consumers good for US, energy security and good for the environment.So a real opportunity to create unique value, we said at the time of the announcement that we would create on an annual $2 billion of synergies once we got up and running.My expectations will be more than that.You think this is the type of acquisition that causes a re rating in Exxon stock?I think it adds to what we believe, the unique value contribution that we can bring to this industry.We have been trying to help people understand that as a company that has an expertise and technology capabilities in transforming hydrogen and carbon molecules can certainly continue to play an important role in our existing industries.We've got huge opportunities in developing other materials that society needs.That leverages the hydrogen and carbon molecule that doesn't involve combustion, the emissions, and we see a huge opportunity in that space force.The permanent basin has been the big opportunity for Exxon for decades, but you've really been touting the opportunity you see in Guyana.Can you help me understand when you look at the overall how significant that's going to be, as you know, the way people often forget that our industry, the oil and gas production business, is one that continually declines because you've got every barrel you produce is a barrel that's not available tomorrow.And so the challenge in our industry is to continue to go out and find new resources.The brain goes online in production, and today's challenge is to do that in a low cost way.So you have low cost of supply, but also do it with low carbon intensity.And so our developments have been very focused on finding those unique resources, bringing our unique capabilities to bear so that we create the best in industry supply source from a cost standpoint and from an emissions standpoint, Guyana is absolutely critical in that critical not only for our company, but I would say it's critical for the people of Guyana.The value that we're bringing in to Guyana is government and its people with the jobs, the economic activity.I mean, their GDP is growing as fast as in the world right now, and in part due to this I've heard you talk about low carbon a lot low carbon solutions, certainly sort of the big push ahead for Exxon Mobil, specifically on carbon removal, direct air capture.You've heard that Holy Grail number $100 a tonne is where you need to get at to make this an impactful solution.What's the timeline for?I think it really it's very difficult to put a timeline on a technology breakthrough.What we recognise is we have a suite of technologies that historically have been used for different applications.We're now trying to repurpose those technologies to a much harder, much more important application.Recognising that today, the carbon capture technology only works for the highest concentration streams of CO two.So we've got to find a way to bring.The good news is there's a lot of technology progress made in technology that haven't been applied to this space.And so we're with our technology organisation, looking at new materials, new opportunities to try to bring that cost down.And there are many other companies trying to do the same thing.And so our view is, every company should be leaning into its areas of expertise, trying to crack that nut once that's solved, whoever solves that, we believe our company is going to play a critical role in deployment because there are very few companies that have the ability to build large scale facilities that convert molecules and can do that around the world.We have that capability as well as the technology.So some combination of those things will come together and we'll keep moving down the path of decarbonizing the world.How would you create the regulatory environment under the administration?How would I grade it in terms of getting done, what you need to get done?So I think the Biden administration has come in and with a very clear objective of reducing emissions in trying to decarbonize society, which is a good thing.I think they've also been very cognizant of the balance that has to be struck between doing that and at the same time continuing to meet the needs of the people providing reliable and affordable energy.I think the legislation, the IRA legislation that the Biden administration is important because it focuses on the objective which is carbon intensity and reducing carbon intensity.What is left open is how best to do that, and the value or the importance of that is that it allows every company, every sector, all the technology organisations to focus on how best to achieve that based on their capabilities, their skills and their state of circumstances, and so it doesn't try to prescribe how to do something.Instead, it focuses on what must be achieved.I think that makes for good policy that certainly opened the door for us to take the capabilities that we've had that we've developed over the last 140 years and apply that to this challenge of reducing emissions.And we think we have a really good opportunity to make a very large reduction in emissions with a very large investment, one that will move the needle.You've been very vocal a lot more about the efforts that ExxonMobil is making to reduce emissions.It strikes me as a very cautious approach, and you've talked about being more disciplined, playing into your strengths, returning shareholder value.I wonder where climate science plays into.All of you were just on a panel with John Podesta, the climate advisor said.Look, we don't have the time to be moving slowly and cautiously.How do you think about that?Because at the end of the day, it is to address what scientists have called the climate crisis.Well, I think there's a you know, I would separate the role of a company from a government and if you want to dramatically reduce the amount of emissions happening today, you're going to have to abandon the systems.The energy systems are in place, the data they're delivering that that means people around the world are going to have to do without.And the people who are lower on the economic prosperity scale developing countries, people who are still trying to make their way up the economic ladder.If they don't have affordable, reliable energy, they'll be penalised that, in my definition is not a just transition balance is important.I don't think anybody's arguing about the need to reduce the question is how can we best achieve that reduction?And frankly, if you go back in time, we've been too narrowly focused on a very small segment of solutions.What we got to do is open the aperture and and find every companies and industries that to reduce emissions and do it in a constructive way.And so I think the good news is that that aperture is starting to open.We do see policy makers around the world recognising that we're going to need more solutions, not fewer and allowing those solutions to come in and play a role.I think that's the way we make progress.The fastest.Where is Exxon in 2050?Well, we're still, I suspect, be producing oil and gas, depending on how quickly the world transitions.That may be a smaller part of the portfolio that it is today.But if you look at our core capabilities, the technology capabilities that we have, we can make a lot of other products that meet the needs of society.I'll just give you two very quick examples.We've tasked Technology Organisation to take the molecules that we're using today in existing applications and make something new that the world needs.So gasoline molecules, molecules that go into the gasoline transportation fuel.We've got a technology that can take those same molecules, make a resin out of them and replace rebar.It's lighter, lower emissions and more cost effective.It doesn't corrode so a brand new product to the world made out of gasoline molecules.Likewise, black wise, carbon dense streams in our refineries to use that to make carbon materials and to use them in batteries for electrifying cars or using to make a new process to making carbon fibre so ways to take these molecules and make new products that society needs in large and growing markets.So my view is, we'll continue to leverage those core capabilities of transforming molecules, but the products that we make in 2050 may be very different than the products that we make today.But it'll still be relying on those key core capabilities that, frankly, this business has been built on.Our company has been built on thank you, so oil and gas is still part of the portfolio in 2050.I think people, there's oil and oil and gas that goes into combustion and emissions associated with that.And then there's oil and gas in the hydrocarbon molecules that go into products that people use every day in their lives.And my only point is we've got to deal with the combustion and, more specifically, the emissions.So with combustion.But there's a huge utility for the hydrogen carbon molecule and the products that society needs.So my view is you're going to continue to see those products.Oil and gas use it as if nothing else, a feedstock to make products that society needs for modern living.Thank you for always making time for us.We appreciate it.Ex Darren Woods.Enjoy the rest of the conference.Thank you.