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US oil giant ExxonMobil Wednesday outlined a massive capital spending program to boost production growth over the next five years in a bid to reverse recent output declines.
Exxon, delivering its annual analyst presentation at the New York Stock Exchange, said it would spend an average $38 billion per year in the 2013-2017 period, up $1 billion from the prior year's forecast.
Exxon ended 2012 with oil and gas output of 4.24 million barrels a day, down 5.9 percent from 2011 and nearly double the decline Exxon had projected a year ago.
On Wednesday the company forecast production would continue to decline over 2013, by one percent, then pick up to an annual pace of two to three percent through 2017.
Exxon outlined a wide-ranging investment plan, built on expanding legacy assets, like those in the Gulf of Mexico and Qatar, along with further progress promising ventures in Russia, offshore Romania and elsewhere.
"Everything we do is directed with the very long term in mind," said Exxon chief executive Rex Tillerson. "We continue to deliver strong results and we're well-prepared to continue."
Tillerson told analysts that about half the gap between projected and actual 2012 output was due to operational problems, while the remainder was involved accounting.
Exxon projected the capital plan would boost its output from 4.2 million barrels a day of oil-equivalent in 2012 to 4.8 million barrels a day in 2017.
Exxon was questioned about its profitability per barrel of oil produced, which analysts complain has dropped in recent years. Tillerson said Exxon and its peers were in the midst of a multi-year phase of increased investment with the payout to come later.
"We're growing capital employed... more quickly than we're realizing cash," Tillerson said. "I never would have dreamed we'd be spending at these levels."
Some of the extra spending goes to choice assets, such as Iraq or the assets associated with its acquisition of XTO that Exxon believed would pay out over the long term.
"We can shoulder (lower returns) for a period of time," Tillerson said of lower returns. "But we don't want to shoulder them forever."
Tillerson said Exxon was working with the Canadian government on contingency plans to move Canadian crude to market if the long-discussed Keystone XL pipeline is not approved by the US State Department.
Exxon downstream chief Mike Dolan said possible alternatives to Keystone include using rail transportation and barges. "That would be difficult if that doesn't come to pass," Dolan said of the Keystone project.
Tillerson said the company also continued to work with Iraq, which has threatened to bar Exxon from developments if it pursues developments in the Kurdish portion of the country.
"We want to be engaged throughout all of Iraq," Tillerson said. "We continue to dialogue with the central government... to be a positive party to bring stability to all of Iraq."
Tillerson said oil-producing countries were much more focused on the US energy renaissance than they were 12 months ago.
Tillerson said he had not seen a "dramatic shift" in investment decisions by energy-rich countries in light of the US boom, but "they're watching it... they're starting to study the implications of what it means for them."
Dow component Exxon, which alternates with technology giant Apple as the largest US company by market capitalization, was off 0.4 percent in early afternoon trade in New York.