Darren Woods
Chairman and Chief Executive Officer at Exxon Mobil
Thank you, Jennifer. Good morning and good afternoon everyone. Thanks for joining us today.
Our second quarter operational and financial results were very strong. Well, the market has clearly been a factor. Our results reflect our focus on the fundamentals, as well as plans and investments we put in motion several years ago and stuck with through the depths of the pandemic. They also reflect the outstanding work of our teams across the world, who operated our facilities safely and at high utilization levels, which drove needed production and throughput. We are proud of their commitment to supplying the energy and products the world needs and delivering on our strategic priorities.
Increased production, higher realizations and aggressive cost control generated strong earnings and cash flow. We also delivered excellent safety and operating performance. As global demand recovers, we continued to invest in our portfolio and grew our year-to-date production in the Permian by about 130,000 oil equivalent barrels per day versus the first half of 2021. For the full year in the Permian, we expect to achieve 25% production growth for the second consecutive year.
In Guyana our total capacity is now more than 340,000 oil equivalent barrels per day. Our Liza Phase 1 development is producing above design capacity with excellent performance. Liza Phase 2 started production earlier this year and has recently reached the design capacity of 220,000 barrels per day.
As demand has continued to recover, so has production from our industry-leading refining circuit. We increased throughput by 180,000 barrels per day in the first half of 2022 versus the first half of 2021.
We continued to demonstrate our value as an essential partner during the quarter. For example, ExxonMobil has recently been awarded an interest in Qatar's North Field East expansion. We have worked closely with the Qataris for decades. This attractive agreement further leverages our experience as a global leader in LNG, giving us the opportunity to help grow Qatar's LNG capacity by 30 million tons per annum, by 2026.
Partnerships such as these are also an important part of unlocking future opportunities in our new businesses like carbon capture and storage. We recently signed multiple MOUs to explore the development of large-scale CCS projects in China, Australia, the Netherlands and Indonesia. Lastly, we further strengthened our portfolio by advancing a significant refining capacity expansion on the U.S. Gulf Coast, discovering new resources in Guyana, progressing LNG production in Mozambique; addressing non-core assets with announced divestments totaling more than $3 billion.
We continued to invest through the pandemic with the understanding that demand would recover. With the Beaumont refinery expansion, we're on pace to increase our refining capacity on the U.S. Gulf Coast by more than 17% or 250,000 barrels per day in the first quarter of 2023. During the quarter, we also announced two discoveries in Guyana, adding to the estimated recoverable resource base, which is nearly 11 billion barrels. Natural gas began flowing at the Coral LNG project offshore Mozambique. The project remains on track to achieve the first LNG cargo later this year.
Finally, we progressed our divestment program at an advantageous point in the cycle. Announced asset sales include XTO Energy Canada, our Romanian Upstream affiliate and our Barnett shale gas assets. The Barnett Shale divestment closed in the second quarter. The other two are anticipated to close later this year, subject to regulatory approvals.
Overall, it was a very strong quarter, in both the financial results and in progressing our strategic priorities.
The strong second-quarter results reflect a tight global market environment, where demand has recovered to near pre-pandemic levels and supply has attritted. This situation was made worse by the events in Ukraine, which have contributed to increases in prices for crude, natural gas, and refined products.
In the first quarter, average Brent crude prices rose by about $22 per barrel. In the second quarter, Brent crude prices moved up by another $12 per barrel, pushing the benchmark marginally above the 10-year range.
Natural gas prices remain well above the 10-year historical ranges, amid ongoing concerns about European supply.
Refining margins are even more pronounced versus the 10-year range. They remain at very high levels, reflecting the significant impact on refining capacity resulting from the pandemic. In July, we saw some relief as margins moderated with improved supply and demand balances.
Global chemical margins, in contrast, remained near the bottom of the cycle. However, we did see a slight improvement in the quarter, mainly in Asia Pacific.
Margins in North America tightened during the quarter, as product prices continued to lag the steep increases in ethane feedstock costs, consistent with higher gas prices.
Before recapping our financial results, let me touch on the market environment underpins them. As I mentioned in my pre-recorded remarks, large annual investments in oil and gas production are required to offset normal depletion even more is required to grow net production. Prior to the pandemic industry investments were below historical levels. The economy-wide shutdowns during the pandemic exacerbated the problem. We are now experiencing tight markets across most of our businesses, that supply of lags demand recovery.
We clearly see the tightness in supply and refining with the closure rate during the pandemic was three times the rate of the 2008 financial crisis. Given the long investment cycle times, growing supply will not happen overnight. At ExxonMobil, throughout this period, we stayed focused on the fundamentals and let our IOC peers in oil and gas investments. We leaned in when others leaned out, including investments in US refining capacity. Notably, with our Beaumont refinery expansion.
Our investments over the last five years are paying off today and helping to meet the needs of families everywhere with greater supply than otherwise would be the case. For progressing investments in our traditional businesses, we are also advancing our portfolio of opportunities consistent with our core capabilities and low carbon solutions. We expect that these two will pay off in the years ahead.
For our shareholders and for our environment.
With that as a backdrop let's turn to the second quarter financial results.
Earnings totaled nearly $18 billion on increased production, higher liquids and natural gas realizations and strong refining margins.
We continue to drive efficiencies with $6 billion in structural cost savings versus 2019. We remain on track to achieve more than $9 billion in savings by 2023.
Capex was $4.6 billion in the quarter and $9.5 billion year-to-date. We remain on track for our full-year capex guidance of $21 billion to $24 billion.
Cash flow from operations was $20 billion, further strengthening our balance sheet.
Our net debt-to-capital ratio declined to about 13%, while the gross ratio is now at 20%, at the low-end of our target range.
We returned $7.6 billion to shareholders during the quarter in the form of dividends and share repurchases. The increase in distributions reflects the confidence we have in our strategy, the performance we are seeing across our businesses, and the renewed strength of our balance sheet.
As I mentioned earlier, we are now experiencing tight markets across most of our businesses, as supply lags demand recovery. Our strong performance reflects the sizeable investments we've been making over the past several years and our focus on the fundamentals. Those two things put us in great position to deliver increased production at a time when the world needs it most.
We're continuing to increase production of low-cost barrels in Guyana and the Permian. We are doing all of this while maximizing output of our existing facilities, including a new daily production record set by PNG LNG in July.
Our new Corpus Christi complex was cash and earnings positive in the first half of the year, with the world-scale steam cracker demonstrating design capacity.
Our U.S. Gulf Coast refining capacity is poised to increase by about 250,000 barrels per day with the start-up of the Beaumont refinery expansion project in the first quarter of 2023.
Two new LNG projects are also advancing. Coral LNG in Mozambique is set to deliver it's first cargo in the second half of this year. Our Golden Pass LNG project, which will provide 18 million tons per year of new LNG supplies, remains on schedule to start up in 2024. Once completed, Golden Pass will increase LNG from the Gulf Coast by 20%.
In addition, we continued to divest non-strategic assets at an opportune point in the cycle.
We delivered strong safety and reliability, while controlling costs. These moves are improving our asset mix, lowering our breakevens, and boosting our resiliency.
Our Low Carbon Solutions business continues to grow our portfolio of opportunities with the four newly announced carbon capture and storage opportunities in Australia, China, Indonesia, and the Netherlands.
I'm extremely proud of the work our people are doing. All of their efforts are consistent with our strategic priorities, which our shareholders are being rewarded for.
Today, with an even stronger balance sheet, we are well positioned to continue to invest and to drive shareholder returns throughout the cycles. Our focus on the fundamentals is unchanged.
We continue to leverage our core capabilities to advance our strategic priorities and to make the investments needed in this long cycle business. With our constancy of purpose and consistent approach, we will successfully address the dual challenge - providing energy and products modern societies need while lowering society's greenhouse gas emissions - leading industry in the energy transition. Thank you.
