Exxon projects flat production through 2012

For a company that's gone to greater lengths than nearly anyone else in the Big Oil realm to pooh-pooh Peak Oil, ExxonMobil's recent presentation to analysts sure doesn't do anything to boost the cornucopians' case.  During the meeting, Exxon presented a chart projecting its worldwide oil production staying flat for the next four years.  A Business Week reporter strikes an incredulous pose:

Ponder that for a minute. Texas-based Exxon is the largest publicly
traded company in the energy business. In fact, it's the most
profitable company in the history of capitalism, earning a record $40.6
billion on sales of $404 billion last year. Yet even with prices at the
pump near all-time highs, Exxon isn't planning on producing any more
oil four years from now than it did last year. That means the company's
oil output won't even keep pace with its own projections of worldwide
oil demand growth of 1.2% a year.

Imagine a chief executive of another growth company making a similar announcement to Wall Street as Exxon Chairman Rex Tillerson. What if Steve Jobs said Apple wasn't going to sell any more iPhones than it did in 2007? What if Howard Schultz said Starbucks' latte production would stagnate, at least until the next U.S. president
embarked on his or her reelection campaign? Shares of both companies
would plummet.

So what gives?  Well, Exxon's two biggest producing regions are the United States and Europe… and output there is down 37% since 2000. 

Add to that the nature of the contracts the governments of Nigeria and Angola have negotiated with Exxon in recent years: Exxon gets its payment in barrels, and if the price per barrel rises beyond a certain point, Exxon gets to keep fewer barrels as profit. And that's just one aspect of the "resource nationalization" issue.

Exxon plans on bringing new fields online in Russia, the Middle East,
and Africa over the next four years but they won't be enough to
generate growth beyond what the company is losing due to the maturation
of its fields in the North Sea and Alaska, the nationalization of its
fields in Venezuela, and volumes lost due to those production sharing
agreements with other countries. "It has always been a challenge to
grow volumes when you are working off of a base as large as ours,"
Tillerson told the analysts. Indeed, Tillerson got more bad news on
Mar. 18 when a British judge freed up the foreign assets that Exxon had
sought to freeze in its ongoing dispute with the government of

Still, even as production flatlines, rising oil prices mean rising profits for Exxon.  How long before Congresscritters start demagoguing that again?

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