Darren Woods
Chairman and Chief Executive Officer at Exxon Mobil
Thanks, Jennifer. Good morning, everyone. Before covering our earnings highlights, I want to begin by recognizing the men and women of ExxonMobil. While this quarter's results were clearly helped by a favorable market, the fact is we're in this position because of the hard work and commitment of our people over the past few years.
Where others pull back in the face of uncertainty and historic slowdown, retreating and retrenching, this company moved forward, continuing to invest and build to help meet the demand we see today, and position the company for long-term success in each of our businesses. We understand how important our role is in providing the energy and products the world needs, and while the market has clearly been a factor, the results we report today reflect that deep commitment.
I mention this because it is at the heart of our company and its culture. We know the role we play and are incredibly proud of it. We work together as a team, confident in our mission and determined to do our part in meeting the world's energy needs and leading the way in a thoughtful energy transition.
Overall, I'm pleased with our third-quarter operational and financial results.
Higher natural gas realizations, strong refinery throughput, robust refining margins, and rigorous cost control drove our earnings improvement. We continued to increase production to address the needs of consumers, which contributed to earnings and cash flow growth, a stronger balance sheet, and significant value creation. Our results also reflected the outstanding work of our teams across the world, who operated our facilities reliably at high utilization rates.
Let me highlight a few examples of our progress.
First, in Energy Products, we boosted overall refinery throughput to its highest quarterly level since 2008, responding to tight market conditions, and we continued to make progress on the Beaumont refinery expansion, which will increase capacity by about 250,000 barrels per day in the first quarter of 2023.
We also increased production from our high-return assets in the Permian and Guyana. Our production in the Permian basin reached nearly 560,000 oil-equivalent barrels per day building on our strong growth from last year. We grew our production in Guyana to 360,000 barrels per day during the third quarter with Liza Phase 1 and 2 both exceeding design capacity. We also had continued exploration success with two additional discoveries in the quarter. Earlier this month, first LNG production was achieved from Mozambique's Coral South floating LNG development contributing new supply amid growing demand for LNG globally.
We continue to expect total Upstream production of 3.7 million oil-equivalent barrels per day for the year. Looking longer term, we remain on track to grow low-cost production and meet our 2027 plan with more than 90% of our Upstream investments generating over 10% returns at $35 per barrel.
Our ability to increase production while reducing cost improves our competitive position, benefits consumers, and generates capital to fund meaningful investments demonstrated by one of our recent press releases announcing that our Low Carbon Solutions business signed its first - and the largest-of-its-kind - customer contract to capture and store up to 2 million metric tons per year of CO2.
This marks an important milestone in developing our newest business. It's also a good example of how we're supporting other companies in reducing their greenhouse gas emissions. We look forward to sharing more about our progress in developing an attractive Low Carbon Solutions business in December, as part of our corporate plan discussions.
We continued to actively manage our portfolio, announcing the sale of our interest in the Aera oil-production operations in California and our refinery in Billings, Montana. Proceeds from divestments completed year-to-date total $4 billion, as we captured incremental value for these non-core assets in today's higher-price environment. These sales enable us to concentrate on our higher-value, advantaged assets.
Finally, you may have heard earlier this month that with two decrees, the Russian government has unilaterally terminated ExxonMobil's interests in Sakhalin-1 and transferred the project to a Russian operator.
In March, we stated our intention to exit the Sakhalin-1 project and discontinue our role as operator, and took an impairment of approximately $3.4 billion at the time. While our affiliate was in force majeure due to the unprecedented impact of global sanctions, we continued to make every attempt to engage in good-faith discussions with the Russian government and all Sakhalin-1 partners to affect a smooth exit - to the benefit of all parties.
Our priority all along has been to protect employees, the environment and the integrity of operations at the facility. While the recent decrees violate our rights in Russia, established by our production sharing agreement, and interrupted the exit process we were working, it did not prevent us from safely winding down our operations. We're proud of our employees and the many significant achievements they led since 1996 - including the most recent challenge of the government takeover. We do not anticipate any new, material costs associated with the exit.
This next slide illustrates the variability the industry is experiencing across the markets most relevant to our business.
In the third quarter, crude prices moved back within the upper-end of the 10-year range as higher supply slightly exceeded demand. Natural gas prices rose to record levels in the third quarter, reflecting concerns in Europe about the withdrawal of Russian supply as well as efforts to build inventory ahead of winter. While natural gas prices recently moderated, they remain well above the 10-year historical range. In the U.S., prices increased by about 15% driven by higher summer cooling demand and inventory concerns.
Refining margins remained well above the 10-year range due to inflated diesel crack spreads resulting from expensive natural gas and high demand for diesel. Higher refinery runs and flat demand for gasoline in the U.S. resulted in refining margins declining from the second quarter.
In contrast, global chemical margins fell below the bottom of the 10-year range reflecting weakening global demand. Margins in North America and Europe have softened with regional pricing moving closer to global parity as demand and logistics constraints relaxed. Asia Pacific remained in bottom-of-cycle conditions as COVID restrictions continue to suppress demand in China. Despite these challenges, our Chemical Products business delivered another solid quarter on improved product mix, strong reliability, and good cost control.
Before leaving this chart, I want to make one other very important point - the value of a diversified portfolio.
With just the three quarters shown, you can see how the value has shifted across our different businesses. Our diversified portfolio has served us well during the volatile swings in prices and margins across the various businesses.
As the energy system evolves along an uncertain path, the investments in our broad portfolio of advantaged businesses - including our Low Carbon Solutions business - will play an even more important role in capturing value and outperforming competition in the very near term and across a much longer time horizon.
Before I turn it over to Jennifer, let me recap our key takeaways on the quarter.
We've continued to progress our advantaged investments, drove additional structural efficiencies and created sustainable solutions that deliver the energy and products, everyone needs. This has resulted in strong earnings growth bolstered by higher refining throughput and cost-control, which more than offset margin declines.
We've continued to strengthen our industry-leading portfolio and increased production from our high-return assets in Guyana and the Permian. In addition, earlier this month, our low-carbon solutions business signed the largest of its kind customer contract to capture and store up to 2 million metric tons per year of CO2. This is a strong indication of the growth opportunity we have in this new business.
We've also continued to actively manage our portfolio, announcing the Area Upstream and Billings refinery divestments, and closing the sales of our Romanian upstream affiliate and XTO Energy Canada.
Our diversified portfolio of advantaged businesses, and robust balance sheet provide a strong foundation to invest in value-accretive projects and drive attractive shareholder returns through the cycles.
In aggregate, the work we are doing today is delivering critical products in a very short market, longer term, it is delivering improvements that strengthen our structural advantages, meet society's growing needs for energy and modern products, reduce greenhouse gas emissions and double earnings and cash flow by 2027 versus 2019. In short, profitably leading our industry toward a net-zero future.
Thank you.
