*

Exxon project spending to hit $28 billion-$33 billion a

year by

2030

*

Permian shale output to triple, two new Guyana projects by

2030

*

Big investment in low carbon business awaits revisions to

US

hydrogen incentives

*

Company's cost-reduction target increased to $18 billion

by 2030

By Gary McWilliams and Mrinalika Roy

HOUSTON, Dec 11 (Reuters) - Exxon Mobil ( XOM ) said on

Wednesday its annual project spending will rise to between $28

billion and $33 billion between 2026 and 2030, with a goal of

lifting oil and gas output by 18%.

The top U.S. oil producer laid out a five-year plan to

expand output and increase earnings by 2030 by $20 billion over

this year's projected $34.2 billion.

The new targets come as Exxon is riding high. Its Guyana

operations are generating huge profits and its U.S. shale

business is on track to double oil production this year through

its acquisition of Pioneer Natural Resources.

CEO Darren Woods said the increased project spending is

expected "to generate returns of more than 30% over the life of

the investments." Exxon's focus on producing oil and gas from

low-cost fields offers it a unique competitive advantage, he

said in a media briefing.

Mergers remain a means to accelerate its businesses, Woods,

said, adding: "the advantages we're growing in my mind opens the

door for M&A (mergers and acquisitions)."

Exxon shares dipped 0.7% to $111.92 with many of the

projects and targets already known. The higher spending took

analysts by surprise. Its prior capital spending excluding

Pioneer-related outlays called for $22 billion to $27 billion a

year through 2027.

WAIT AND SEE

"Production plans and the outlook for earnings look broadly

in line" with expectations, wrote RBC Capital Markets analyst

Biraj Borkhataria. "The market may remain skeptical around the

earnings potential until we see further evidence of delivery."

The company's cost-reduction target was increased to $18

billion by 2030, said CFO Kathryn Mikells, up from the earlier

$15-billion target by 2027. Exxon's strong balance sheet, with

$27 billion in cash and equivalents, "provides a buffer against

price volatility," said Mikells.

Exxon aims to more than triple its production in the

Permian, the top U.S. shale field, to 2.3 million barrels per

day by 2030 and pump 1.3 million bpd from its lucrative Guyana

operations.

Overall oil and gas output should hit 5.4 million bpd, up

about 18% from 4.58 million bpd currently. Its long-range target

is more aggressive than shown by U.S. rival Chevron ( CVX ),

which plans to reduce next year's project spending and slow

shale production growth.

President-elect Donald Trump's pledge to encourage U.S. oil

production and "get out of the way of the industry" bodes well

for Exxon and energy producers, Woods said. However, its plans

can be revised based on market conditions, he said.

Exxon announced two new projects for Guyana by 2030, in line

with a previous statement of seven to 10 in total. Its liquefied

natural gas production target remains unchanged at 40 million

metric tons per annum.

SHALE TARGETS

In its U.S. shale operations, Exxon expects to achieve $3

billion in cost savings from combining with Pioneer's shale

operations. Drilling engineers at Exxon headquarters remotely

control the combined 35 drilling rigs operating in the Permian

basin, said Vice Chairman Neil Chapman.

Improved economies of scale in drilling, water disposal and

longer wells also have reduced the number of wells drilled while

increasing the amount of oil recovered from each by 20%. Exxon

also is using a new fracking material supplied by its refineries

to drain oil and gas from shale wells, said Chapman.

The new targets aim to assure shareholders that returns can

be sustained through oil market price swings.

But Exxon's 12.7% year-to-date share gain is well above the

sector's about 8.4% appreciation as measured by energy mutual

fund XLE. Its share-price increase contrasts with double-digit

percentage declines in shares in ConocoPhillips ( COP ) and

Occidental Petroleum ( OXY ) this year.

LOWER CARBON FUELS

The company is investing in carbon capture and sequestration

operations around the world. It has contracts for collecting 7

million tons of carbon annually, that could earn "very solid

returns" from the business, said Woods.

Earnings from its low carbon solutions business can increase

by $2 billion by 2030 compared to this year. Exxon has not

broken out the unit's 2024 profit.

The acquisition of Denbury provided a carbon pipeline

network that Exxon is using to develop its business helping

industry reduce atmospheric emissions of climate-warming carbon

dioxide.

Exxon will hold off on approving a massive hydrogen project

in Texas pending revisions to U.S. incentives for such projects,

Woods reiterated. The administration of President Joe Biden set

regulations to restrict incentives for hydrogen made from

natural gas, a position Exxon opposes.

"How far we choose to go to invest will depend on the

policies put in place," he said.

Cash not invested in the lower carbon businesses can be

invested elsewhere, he said. Exxon is considering providing

lower carbon energy for data center operators seeking to boost

access to electric power.