Jeanine Wai: Good morning Kathy, good morning Darren. Questions on the downstream which was a nice positive in 2022. And how do you think the EU embargo on Russian product imports on February 5th will impact your refining margins? And I guess what we’re thinking is that there’s a number of moving pieces between your refining footprint, particularly in the Gulf Coast and Europe and then there’s potential tailwinds for diesel margins as Russian exports dissipate. But there’s also probably need to take into account the likely incremental tightness in BTO supplies? Thank you.
Darren Woods: Yes, I’ll take that Jeanine. I think — start with just the market in general and I think the driver behind the refining margins that we’ve seen here of late is driven by the pandemic impacts of shutting down capacity and then not having that capacity available as demand has recovered. So, the world remains pretty tight and it will stay I think tight, while we wait for additional refinery expansions to come online, primarily out in Asia and the Middle East. I think the Russia impact and the ban on products going into Europe could potentially have some short-term implications. At the end of the day that — those products are going to be needed. So, it really is around logistics, I’ll call it, disoptimization to where the market is pretty efficient and we’ve got the most efficient supply chains and logistics systems lined out.
We’re going to disrupt those and I think it’s a question of how does that disruption manifest itself in the market and what kind of disconnects and discontinuities do you see in the short-term? And then ultimately, we’ll read that — the system will stabilize, reoptimize and I expect higher costs just because of your moving to a less optimum logistics approach, but more stable. I don’t know — that’s — that — I see how that’s going to play out. So, I don’t think there’ll be a long-term impact, it’ll be a short-term one and then there’s just a question how long it takes for the systems to rebalance. I think more fundamental to refining is the shortness and with the economies picking up and with China coming out of its COVID lockdown and the economic growth there and then the view that you take on the economic impacts and how severe recessions are here this year, that’s probably going to play a much bigger role.
If demand picks up, economies continue to grow, we’re going to see that tightness manifests itself and continued higher refining margins, which I think will mean a fairly high margins this year and potentially going into 2024 as well.
Jeanine Wai: Great. Appreciate all the color. Thank you.
Darren Woods: Sure.
Operator: We’ll go next to Neil Mehta with Goldman Sachs.
Neil Mehta: Yes. Thank you, Darren and Kathy. I wanted to spend some time on the Permian outlook for 2023, you made some comments in the prepared remarks about getting to over 600,000 barrels a day. So, I guess that’s about 10% growth as we think about 2023. But just your thoughts on volumes and then ultimately, where should we think about plateau?
Darren Woods: Yes, thanks, Neil. I would take you back to 2018 when we were talking about our strategy in the Permian and we’ve said at that time, our plan was to grow to 1 million barrels a day of production by 2025. When the pandemic hit, we basically said, there’s going to be a delay in a lot of our plans and pushed out those objectives by about two years. So, moving from 2025 to 2027. If you’ll look at my comments and the plans, we’re now forecasting that our Permian production will reach about 1 million barrels a day by 2027. So, very much in line, going all the way back to 2018. And then the comments that we made around the pandemic and the delay that I was introducing. So, I think that’s the context to think about what we’re doing in the Permian and that development.
If you look at 2021, we added about 90,000 barrels a day of production. 2022, very similar number, 90,000 barrels a day. And that in part was what I’d call, the organic development and drilling into production as well as clearing our DUCs inventory. So, as we were in the pandemic, obviously, not a lot of incentive to bring production on and so we concentrated our spend on drilling. And then as we got into higher-priced environments, concentrated on clearing that inventory and bringing those wells to production, and so we were bringing our DUC inventory down. As we go into next year, we’re going to rebuild that inventory, get to an optimum level that we can then use and maintain as we go through the next several years. So, that’s kind of a strategy of how we’re working out.
If you think about, ultimately getting to 1 million barrels a day by 2027, that’s roughly at 13% compounded annual growth rate. That’s going to — that’s not going to be steady every year, that’ll kind of fluctuate, call it, plus or minus 5%. That’s kind of order of magnitude how we’ll see that playing out. And any one year’s production will be a function of the development plans we have and how those development plans manifest themselves in that specific timeframe. But I think bottom-line is we’re basically on plan moving at the pace that we anticipated. And I’m hopeful that as we continue to focus on the technology developments and continuing to improve efficiency, we’ll see either that production bottom-line with more effectively at lower cost, or in fact, more productivity and higher production.
But that’s a function of the ongoing work we’ve got to bring our technology and operational capabilities to bear in the Permian continue to improve what we’re doing there.
Neil Mehta: Thanks Darren.
Operator: We’ll go next to Devin McDermott with Morgan Stanley
Devin McDermott: Hey, good morning. Thanks for taking my question.
Darren Woods: Morning.
Devin McDermott: So, I wanted to ask about the Chemicals business and if we look at the margin chart that you have in the slide deck, it’s the one part of the portfolio where margins are still below the 10-year range. I was wondering if you could talk a little bit about the trends that you’re seeing there as you move into early 2023 with China reopening and that potentially being a positive driver for margins. And then also just talk through some of the discrete growth projects we got coming on over the next few years to drive that that earnings growth you talked about at the Investor Day last year, I think Baytown, you noted later this year and get the China Chemicals Complex still a few years out, but some of the growth projects and the progress there as well?
