ExxonMobil Targets Net Zero Emissions in Permian Basin by 2030

Accelerating its target of emission-reduction for unconventional operations in New Mexico and Texas, Exxon Mobil Corporation (XOM) plans to achieve net-zero greenhouse gas emissions by 2030 in the U.S. Permian Basin. Following the announcement, shares of the global oil and gas corporation closed 1.2% higher on Monday.

Exxon Mobil aims to reduce Upstream greenhouse gas emissions intensity by 40-50% by 2030, compared to 2016 levels. (See ExxonMobil stock charts on TipRanks)

Plan Details

The electrification of operations, increased methane mitigation and detection technology investments, the elimination of routine flaring, and equipment and technology upgrades to include nature-based solutions, are expected to be supportive factors for the company’s greenhouse gas emission reduction efforts in the Permian Basin.

By the end of 2021, flaring volumes across the company’s Permian Basin operations are expected to be reduced by more than 75% compared to 2019. Additionally, the company hopes to eliminate all routine flaring in the Permian by the end of 2022.

Achievements & Expectations

The company is likely to exceed its 2025 greenhouse gas emission-reduction plans, which were announced in December 2020. Markedly, at the end of 2021, a reduction of 15-20% in greenhouse gas intensity from Upstream operations compared to 2016 levels is anticipated, four years ahead of schedule. Additionally, a reduction of 40-50% in methane intensity and 35-45% in flaring intensity is also expected.

As of September 30, 2021, ExxonMobil recorded an average production of 500,000 barrels of oil equivalent per day from its unconventional assets in the Permian Basin. This constituted more than 40% of the company’s U.S. net production. ExxonMobil expects greenhouse gas emissions to decline with increased production in the Permian.

CEO Comments

The CEO of ExxonMobil, Darren Woods, said, “Our groundbreaking plans to reach net-zero for Permian Basin operations further demonstrate our commitment and support of society’s ambitions for a lower-emissions future. We have plans to reduce greenhouse gas emissions intensity across our businesses by deploying the capabilities and technical strengths that are foundational to ExxonMobil.”

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Wall Street’s Take

On December 2, BMO Capital analyst Phillip Jungwirth maintained a Hold rating on the stock and a price target of $73 (18.54% upside potential).

Overall, the stock has a Hold consensus rating based on 6 Buys, 6 Holds, and 3 Sells. The average ExxonMobil price target of $70.47 implies 14.44% upside potential from current levels. Shares have gained 50.6% over the past year.

Risk Analysis

According to the new TipRanks Risk Factors tool, ExxonMobil stock is at risk mainly from Macro & Political, which contributes 25% to the total 24 risks identified for the stock.