Good day, everyone. Welcome to this Exxon Mobil Corporation Fourth Quarter 2018 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the call over to the Vice President of Investor Relations and Secretary, Mr. Neil Hansen. Please go ahead, sir.

Thank you. Good morning, everyone. Welcome to our fourth quarter earnings call. We appreciate your participation on the call and continued interest in ExxonMobil. This is Neil Hansen, Vice President of Investor Relations. Joining me on the call today is our Chairman and CEO, Darren Woods. As we’ll discuss on the call today, we are very pleased with our performance in the fourth quarter and with our full year results. This was a quarter highlighted by continued value generation from our integrated business model, additional growth in liquids production and successful highgrading of our downstream portfolio. In addition, we made significant progress on investments that will generate long-term accretive value for our shareholders. After I review the quarterly financial and operating performance, Darren will provide his perspectives on our business reflecting on 2018 and the year ahead. Following this, Darren and I will be happy to take your questions. Our comments this morning will reference the slides available on the Investors section of our Web site. I’d also like to draw your attention to the cautionary statement on Slide 2 and the supplemental information at the end of this presentation, which starting this quarter you’ll notice includes a listing of significant non-operational events that impacted quarterly earnings. Moving to Slide 3, I’ll now highlight the developments that influenced fourth quarter performance. Crude oil prices decreased during the quarter with Brent down $7.51 and WTI down $10.62. Conversely, gas realizations were up in the fourth quarter supported by strong LNG prices and seasonal demand. Henry Hub was also up $0.74. Production in the Permian increased another 12% relative to the third quarter and was up 93% from the fourth quarter of last year. Exploration success continued offshore Guyana with the Pluma discovery, our 10th find so far on the Stabroek block.…

Thank you, Neil, and good morning, everyone. Great to be on the call today. Let me just start by providing my perspective on the past year. I think as you all know and will recall in March of last year, we laid out an investment plan to structurally improve the earnings and cash flow potential of our business, while improving our returns across the wide range of price environments. As I reflect on 2018, I am extremely pleased with the progress we have made on those plans. We not only delivered on our commitments for the year, we identified additional upside. The price environment in 2018 was unpredictable which once again demonstrated the value of our integrated business model. We saw significant swings in commodity prices compounded by the transportation constraints in the Permian Basin in Western Canada. Our upstream integrated logistics and manufacturing position allowed us to avoid the impact of market dislocations and thus capture the full value of our barrels. This reflects a deliberate strategy to leverage the scale and breadth of our integrated business model, which certainly paid off in 2018. Against a backdrop of a fairly volatile margin and price environment, we met earnings expectations for the year and generated $40 billion in cash flow from operations and asset sales, the highest level since 2014. This in turn enabled us to fund our ongoing investment program, reduce the debt and consistent with one of our longstanding priorities increase the dividend. In 2018, we increased our dividend by 6% marking the 36th consecutive year of increases. Essential to our plans for growing value is the advancement of a portfolio of advantaged investments. Throughout the year we continued to develop and rigorously test our investments to make sure that our company’s competitive advantages were translating directly into…

Please stand by while we reestablish our audio speaker line. Ladies and gentlemen, please stand by. We’re about to reconnect the main speaker line. Please stand by.

We understand the webcast dropped. We apologize for that. So we’re going to turn it back to Darren and let him finish and then we’ll take Q&A.

I’ll try to pick up where I understand we dropped off which was turning to 2019 perspectives in the chemical business. I was saying that we’re on track for a midyear startup of our Beaumont polyethylene expansion which is going to further strengthen our position in the Gulf Coast. We’re also planning to FID two projects at Baytown that will produce Vistamaxx which is a high growth, high performance propylene plastomer and linear alpha olefins used in packaging oils, waxes and some other specialty chemicals. These projects, along with the others we’ve discussed, will allow us to continue to grow sales of high value, high performance products. As I step back and reflect on the opportunities we have across all three of our business sectors, I’m very excited by the potential to generate significant value for our shareholders. You may have seen yesterday that we announced the formation of new upstream and project organizations. These new organizations will help to facilitate the successful delivery of our investment opportunities. The upstream is reorganizing into three companies, down from seven. The upstream oil and gas company will have five distinct global businesses. Each business will have full accountability for end-to-end results from resource development to production to marketing over the life of the resource, from discovery to abandonment. The upstream integrated solutions company will provide functional expertise to bring the full advantage of the company’s scale, our technology and experience to each global business. The third company, upstream business development, will oversee the upstream strategy and activities to upgrade the asset portfolio through explorations, acquisitions and divestments. This will increase the focus on portfolio optimization and ensure that we continue to aggressively pursue all available value-added opportunities, including divestments. We’re also combining the project organizations from the upstream, downstream and chemical into…

Thank you for your comments, Darren. We’ll try again on Q&A – we’ll turn it over now for any questions you might have.

Thank you, Mr. Woods and Mr. Hansen. The question-and-answer session will be conducted electronically. [Operator Instructions]. We’ll take our first question from Doug Terreson with Evercore ISI.

Good morning, guys, and congratulations on your results and your progress.

Thank you, Doug. Good morning.

So, Darren, while the returns profile of your investment portfolio looks to be pretty strong, I think you highlighted that as the super majors refocused on areas of competitive advantage during the past decade or so that you use divestitures as a fairly productive capital management tool. And on this point, while you guys have had divestitures too, your activity levels have been below peers whether including BP which obviously had an event or not. And so you talked about this a minute ago. I just want to see if you will elaborate on your comments about divestitures as a portfolio management tool or portfolio optimization tool I think is the way you termed it, whether there’s a philosophical reason why ExxonMobil hasn’t been as active as some of the peers and whether divestitures might be more prominent for you guys in the future given the restructuring that you highlighted?

Sure. Thanks, Doug. Thanks for the question. Happy to spend some time talking about that. I think we made reference to it last March. One of the advantages that we have today is as the prices came off in the backend of 2014 and we leaned into the markets and as we’ve talked about loaded up our pipeline of investment opportunity with some very attractive projects, that has allowed us to re-optimize and look at the total value of portfolio. If you go back in time, we’ve had a pretty regular divestment program investing about $50 billion worth of assets since 2008. What we can now in the upstream with this additional project and these investment opportunities we have is increase the focus there. So I would expect to see more activity in divestments in the upstream side of the portfolio. That’s going to be driven really by the opportunities that the market brings. We’ve got I think a pipeline of assets that we think would make sense to market. We’re actively doing that and we’ll see as we go through the year what opportunities kind of come to fruition. I would add though, Doug, that this is a value play. We’re not trying to hit some schedule associated with it. We’re really trying to make sure that we can realize the maximum value out of the assets that we have in our portfolio. As I mentioned, the new organization is going to help us with that.

No, I’m sure. Thanks a lot, Darren.

Thank you, Doug.

Thanks, Doug.

Next, we’ll go to Phil Gresh with JPMorgan.

Hi. Good morning, Darren, and thanks for being on the call today. I guess the first question would be around you talked about some areas where capital spending is moving higher and your Permian rig count has certainly accelerated versus what you talked about in March. So without getting too far ahead what you want to talk about at the Analyst Day, maybe you could talk about at least how you’re thinking about 2019? Are you comfortable with the level that you’re running at now or do you see further opportunity?

Yes. Hi, Phil, thanks. What I will say if you look at 2018 and as Neil mentioned the additional CapEx we spent there was really the acquisition of a couple – in a couple areas Brazilian acreage and then we had I think a real nice opportunity in Indonesia to supplement our lubricants business. And so I think ex the acquisitions that weren’t built into the plan, we were pretty much in line with where we expected to be on CapEx. As I just said, going into 2019 we expect to be around 30 billion and that does reflect the progress and the opportunities that we’re seeing in Guyana, the upside that we’ve seen there as well as the Permian. We just talked a little bit about the Permian because I think one of the things we’ve challenged ourselves with and looking at the unconventional resources is what value, what unique value can ExxonMobil bring to this resource play? And so we have spent the year really making sure that we understand the play that we’ve got, doing some delineation but at the same time leveraging the full capability of ExxonMobil to bring scale and scale development along with technology – additional technology and research into the Permian. So I think what you’ll hear in March is a good overview around how ExxonMobil is uniquely coming into unconventional resources to make this a low cost, long-term successful development play.

Okay. And I guess just my second question would be on chemicals. That would be if you think about 2018, that was an area I think you expected to see some earnings growth in '18 and that was bit more challenging. So maybe you could just talk a little bit more about what you’re seeing both from macro factors but whether maybe there are any company specific factors there as well, or if it’s all just kind of a macro situation?

Yes. I think in the chemical business and across all of them frankly, one of the points we try to make at the analyst meeting is we don’t try to take a position on price for margins and where things are going to be. We try to make sure that the investments we’re making are robust to the cycles that we see in these businesses and are aligned with, one, our advantages but, two, the long-term potential for these businesses. So if I look at chemical, the growth that we see in chemical remained – and the foundational elements of that business in industry remained very strong, continue to see demand growth above GDP going out into the future. Saw that in 2018, 4% demand growth, so very comfortable with what we see as the macro trends from a demand standpoint in chemicals. The challenge that we saw in 2018 I think will carry some into 2019 is the amount of supply that’s come on. If you look at the demand growth and focus on stream crackers for a minute, you probably need about three to four world-scale steam crackers every year to keep up with demand. In 2018, I think six came on. So a lot more supply than what the annual growth would be, but the industry will grow out of that. And we positioned ourselves to make sure that we capture that long-term growth. We don’t get overly focused on the timing of every project and when they’re going to show up. Those things shift around a bit. We’ve got more projects – industry projects coming on in 2019. That timing will move around and I think we’ll see margins move with the timing of that new supply coming on. But again, I think the current environment is not a concern for us. We’ve leveraged – all those projects we’ve put in place have leveraged our advantages and made sure that we’re on the low cost of supply. So irrespective of where we’re at in the cycle, we’re going to be advantaged versus the rest of the industry.

Okay. Thank you.

Thanks, Phil.

We’ll take our next question from Sam Margolin with Wolfe Research.

Good morning.

Good morning.

You touched on this a little bit, Darren, in your perspective section and Neil quantified it too with the integration benefit of $1.2 billion. But I was hoping to ask you to elaborate a little bit in the context of the pipeline and the refinery FIDs in the U.S. that were announced this week. You’ve got a lot of crude coming on stream in other places and so is the fact that there’s a lot of U.S. kind of value chain investment a function of trying to balance the portfolio and the U.S. is the easiest place for you to do that given your existing footprint or is there something commercially about the U.S. and where these supply chains go through that kind of makes you feel like the U.S. is a place where you really want to be an exporter of finished products and not necessarily incremental crude. Just a little bit of background on the molecules you specifically want to target in the U.S. versus internationally.

We’re happy to do that, Sam. Thank you and good morning. I think as we look at that and the value of integration, it is really a function of the markets that you’re in and the structure of those markets. So let me just give you an example of why we think there’s a big opportunity here in the Permian. It’s a very fast growing area. It’s inland and so you’ve got key – you need key logistics to move in and out of that. And so as we’re rapidly growing production in the Permian – as the industry is rapidly growing production in the Permian, there are going to be periods of disconnect as the pipeline and logistic systems try to keep up with that rapid production growth. Our view is we don’t want to be exposed to those disconnects and so we have been looking across our integrated chain. And one of the advantages that ExxonMobil has is we can see across that whole value chain because we participate along the whole value chain. And so making sure that as we are developing our plans in the Permian, at the same time we’re developing our plans and our logistic system’s developing the plans in the refineries so that we make sure that that stays connected. The refinery investments that we’re making stands somewhat alone. They accommodate our production but they’re somewhat alone and disconnected from our physical molecules. The opportunity there is just take advantage of the transportation differential between bringing crude in from West Texas in the Permian versus importing it in from some of the locations. So the margins and what we expect to get out of the refinery expansion is just really a transportation differential in play. And that combined with our advantages make those attractive. So when you look at us and hear us talking a lot about the integration, it is really with Western Canada crude and in Permian because of the specific nature of those markets. And some of the other markets we’re in, we are close to Tidewater, we don’t have the same kind of market dynamics. That value doesn’t manifest itself as explicitly.

Okay. Thanks so much. And then just a quick follow up. You mentioned the small step up in CapEx in 2018 versus your Analyst Day guidance was a function of some acquisitions, some opportunistic acquisitions you had specifically in Brazil. Going forward, are you going to try to pair asset sales with opportunistic acquisitions like that or are these adds just a function of returns and there’s no sort of cash balancing consideration at work here as well?

Yes, I would tell you we’re not – we don’t have a formula where we’re trying to balance ins and outs. It really comes back to maximizing value. So if we see an acquisition, an opportunity there that we think has some high potential and is accretive to value, we’re going to pursue that. I’d also say at the same time we recognize as we bring more attractive opportunities into our portfolio. That gives us an opportunity to trade out some of the existing assets. And the more we bring in and frontend load the pipeline and we prioritize across the highest value investment opportunities, by definition some will get moved out. As we move those assets and those projects back, we have the opportunity to trade on that. Others than don’t have the same pipeline of opportunities that we do, we’ll see a higher value sooner and gives us a chance to trade. So I would expect to see that ramp up and I don’t think we’re going to constrain ourselves to try to balance those things out. But I’d expect to see more divestments coming out upstream. And I know Neil Chapman and his team are very focused on that.

Okay. Thank you so much.

You’re welcome.

Thanks, Sam.

Next, we’ll go to Neil Mehta with Goldman Sachs.

Good morning and thanks Darren for being on the call today. The first question I had was just on the base business. And can you just talk about outside of the major capital projects when you think about the balance of the existing portfolio how you see declines playing out from here? What are you doing to mitigate those declines and talk about some of the larger legacy assets like Groningen where we have seen some volume declines and how do you intend to either offset that or do you look to allow that to continue to happen as you try to maximize returns and cash flow?

Sure. Hi, Neil. It’s good to hear from you again. Let me just say too I’m happy to be on the call and spend some time talking about our business. I’m real happy and pleased with how the organization has kind of come together and we’ve challenged them to make sure that we’re maximizing and leveraging the full capability of the corporation. One of the changes driving our upstream reorganization is to make sure that the upstream businesses have the accountability and the ownership to maximize profitability and value for their assets and for their value chain. And that philosophy, as I mentioned in my comments, have already been pushed out into the organization. And so what we’re seeing in terms of short-term day-to-day operations is I think real aggressiveness looking for opportunities to grow value. I mentioned to you that we’ve identified a number of upsides as we went through the year. Those were bottom up upsides as the organization really focused on where they could find and extract additional value, not just from the new projects but also from the base business. So I feel good about that. And they will make decisions day-to-day around what’s economic in terms of offsetting decline and making sure that we’re getting a good return for every dollar that we spend to bring that production back. With respect to Groningen, that’s a slightly different dynamic as you know. Some of the tremors and the concerns, legitimate concerns expressed by the community there, we worked fairly closely with the government and made sure that we had a mechanism to kind of address those concerns in a responsible way. That agreement that we reached with the government entailed a change in the fiscals, take the fiscals for the Groningen resource back in line with the rest of the gas business and the Netherlands. And so I think all of that has been reflected in our go-forward plans and very comfortable that what we’re doing and the growth that we’ve got will more than offset any reduction that we see there.

I appreciate it. And the follow-up question is just on Liza. As we talked about in Miami, it sounds like you guys are full steam ahead towards that 750,000 barrel a day long-term target. Do you see potential upside to that base case number? And then curious how you’re thinking about the timing of phase 2 especially given some of the uncertainty from a political perspective down in Guyana?

Yes, we still feel really confident about what we’re doing there and advancing Liza. I think as we’ve talked about already with the discoveries that we’ve announced, we see additional FPSOs there. And that resource – we’re still a long way, as I mentioned in Miami, from fully exploring the opportunities out there. So as we continue to advance that exploration we’ll see how it plays out. And we’re optimistic that we’ll find some additional opportunities there and that will continue to grow that resource. With respect to phase 2, Liza 2, that continues to be on track with the schedule that we’ve put in place. And let me just address this – the comment that you made around the government and some of the things happening there. I think it’s important to keep in mind when we go into countries, we go in with a mindset that we’re going to be there for a lifetime, 30 to 40 years. You can’t have a successful development if you’re only talking to a subset or a narrow section of your stakeholder group. So we have been engaged with the sitting government, with the opposition, with communities making sure that the development and what we’re doing is understood and the people are aligned on that. So the opposition understands the contracts that we have in place. I think they understand the value that that development will bring to Guyana and the people of Guyana. So I think it’s very consistent with how we think about a long-term approach to engaging with companies and countries.

Thanks, Darren. We appreciate the increased transparency.

Sure.

Thanks, Neil.

Next, we’ll go to Alastair Syme with Citi.

Hi. Thanks for taking my questions. My first question just as you look at the LNG market, you’re clearly trying to sanction a lot of projects over the next couple of years. So historically ExxonMobil have sought to secure most of the offtake before a sanction. Is that still the way you look at the market and do you have interesting [ph] observations about the changing market dynamics?

Thanks, Alastair. You’re right. That has been the historical model. I think as you kind of make reference implicitly in your question is that market is evolving. I’m not sure it’s going to evolve as quickly as some people are predicting it, but we certainly see a change. And I would anticipate as we make those investments and bring LNG on that we’ll evolve along with the market and make sure that we’re positioned to maximize the value of those investments. And that may mean more portfolio activity in the future. But again, we’re going to pace that in that development consistent with how that market develops.

Okay. Thank you. A quick follow-up question just a point of clarification on the CapEx. I think in 2018 you had around about $3 billion of acquisition capital. Does your 2019 budget incorporate something around a similar level? Is that how you think about the budget?

No. Typically, when we’re putting together our plans, if we’ve got something – a line of sight on something that we think has got a high chance of closing, we’ll try to reflect some of that. If we don’t have any of those, then it won’t show up in the plans. So it tends to kind of vary depending on where we’re at and the line of sight that we have on the opportunities.

Great. Thank you for taking my questions.

You’re welcome. Thank you.

Next question comes from the line of John Herrlin with Société Générale.

Hi, Darren, with respect to the upstream reorg, are all these new entities or groups going to report still to Neil or do they report to the committee?

So the new streamlined organization, one of the big benefits that we have there is moving from seven upstream companies down to three. Those three companies and presidents will report to Neil Chapman.

Okay, great. Then a next one for me is I guess for Neil. Could you address what the impairments were in the U.S. and internationally upstream?

Yes. So, John, as I mentioned, there were – and you can see the detail in the supplemental information as well. We had about $400 million after tax in impairments in 2018, about half of that related to a U.S. Gulf of Mexico asset and then the other half related to unconventional activity in North America.

Okay, I missed that. Thank you.

You’re welcome.

We’ll next move to Biraj Borkhataria with RBC.

Hi. Thanks for taking my question. It was on LNG again. Could you just talk a little bit about the rationale to move forward with the Golden Pass project? And then also how that competes with some of the other options you have, particularly Mozambique, and then a potential Qatar expansion if you were to participate there? Thank you.

Sure. Thanks, Biraj. Let me just maybe start with the philosophy of how we look at competing investments, if you will, or the opportunities within our portfolio. I’ve said this before in different audiences but our strategy here and the way we make decisions on investment is those investments have to compete versus the whole of industry, not just what we have in our portfolio. So the emphasis that we put on our different projects is how do they fit in with the industry’s projects and the additional capacity that they’re going to bring on and make sure that those projects have the advantages needed to be on the lower end of the cost of supply curve so that they will be very competitive versus any other industry projects that come on. That’s very important because as we just talked about with the chemical business in a high growth – while we see a lot of high growth opportunities in LNG, capacity will come on in big chunks. It won’t be necessarily coordinated. So we’ll see I suspect periods of oversupply. And so when we see that period, we’re going to have to make sure that our investments are robust to lower market prices. And then as the growth continues and the market tightens up, we’ll see advantages there as well. So the focus is really on making sure our projects are competitive in the landscape of the industry. With respect to Golden Pass, I think it’s got a lot of strategic value. If you think about the gas business in the U.S., the quantity of gas available to the marketplace, the associated gas that comes on with some of the crude development, we continue to see from a supply standpoint a very attractive supply gas market in the U.S. For us then we’ve got an opportunity to leverage our existing terminal facilities which gives us an advantage. And then it also allows us with a supply point here in the Atlantic basin in North America for a lot of optimization as we look to supply the global markets. And so I think we got some unique advantages with the existing facilities. We’ve got advantages with the industry supply source here in the U.S. And then we’ve got advantages in terms of a global LNG business and the ability to optimize across that whole portfolio, and including the work that we do with QP and optimization with that integrated portfolio.

Can I just ask a very quick follow-up? In terms of timing, you’ve got Mozambique, which maybe FID 2019 and 2020, and then Golden Pass moving forward. Would you expect to – you’re going to do both the developments concurrently or should we expect one to be pushed back a little bit?

Yes, each of them will be a function of kind of the contract availability and how that plays itself out. I’ll tell you with the strong growth that we’re seeing in the LNG market, lots of demand that supply is going to chase here. And so I think we’ll make sure – we’re going to make sure that those developments occur on a very efficient cost effective way. And as I said before with the advantages that we are building into these projects, it’ll be low cost to the supply. And so less worried about what others are doing and making sure that we bring those on in a cost effective manner.

Great. That’s helpful. Thank you.

You’re welcome.

Next question comes from the line of Doug Leggate with Bank of America Merrill Lynch.

Thank you. Apologies, folks, I don’t know if there was a technical issue on your end as well, but I had to dial back in again, so sorry about that. First of all, Darren, let me also reiterate my thanks for you getting on the call today. But I wonder if I could get preempt you a little bit on the upcoming Analyst Day. Your rig count in the Permian is about 50% above what you guided last year or at least the target for the end of the year and clearly there is multiple additional growth potential in Guyana. Is your intention at a high level to – would that notionally increase the targeted growth or would you intend to do more with less or perhaps accelerate disposals to keep the overall kind of scale of your expectations through 2025?

Yes. Thanks, Doug. In March we’re going to have a really comprehensive conversation about how all this pulls together. I’ll tell you with what we laid out for the Permian last March that was very early into the development of that resource. And what I talked about earlier with respect to trying to leverage the capacity and the scales for not only XTO but the full ExxonMobil advantages has led us to I think a very unique concept for developing the Permian resource. And so I think – and we’ll lay that out in March, talk about how we’re approaching that and the investments that we’re making there. So that will be kind of a story onto itself. With Guyana as we continue to see opportunities and leverage what we’re already doing, there’s a lot of efficiencies continuing to roll into production as we have more discoveries and find resources that we can bring on. So I think again we’re going to – we’ll update you with that. But if we continue to have success in exploration, continue to build on that momentum, take advantage of the efficiencies and bring on very attractive, very low cost of supply. As all that kind of comes to fruition, our expectation is we’d see more earnings and more cash and bring in more returns. And at the same time we’ve got the opportunity now to kind of flex that portfolio and we’ll optimize to make sure that we’re not leaving any value on the table. We want to bring in NPV forward as much as possible but do it in a way that keeps cost in control and stays within the capability of our organization. So that’s kind of a constant evaluation and testing that we’re doing. I think the new organization that we’re putting in place is going to help us more effectively advance some of these investment opportunities. So we’ll kind of roll all that together and layout what the implications are going forward in March.

I appreciate that. My follow-up, hopefully a quick one, is just on the reorganization. I realize your disposals this year run I think above the kind of guidance or the list guidance you’ve typically given in the past about what you’d expect that scale to be. Should we read the reorganization in somehow accelerate or brings forward the focus a little bit more? In other words, would you anticipate your disposal program to get even larger as you move forward? I’ll leave it there. Thanks.

Thanks, Doug. I think as we mentioned, we’ve got the upstream business development group which is really – their focus is on what I’ll call as the frontend of the pipeline, the project’s portfolio and optimizing that portfolio. That I think is going to bring an additional degree of focus into that space not only from an exploration standpoint but from an acquisition as well as divestment. So I would anticipate from an upstream standpoint we will see the pace of divestments accelerate. If you step back and look at it in the context of the corporation and you go back in time, a lot of the divestments we’ve seen came out of the downstream. And so the mix will change as we go forward. And then the level maybe slightly up or consistent with what we’ve done in the past.

I appreciate you taking my questions, guys. Thank you.

You bet. Thank you, Doug.

Next question comes from the line of Roger Read with Wells Fargo.

Good morning and like everyone else welcome to the call, Darren.

Thanks, Roger.

I guess we could maybe just talk about CapEx plan this year, the 30 billion, and you’re able to pay off some debt last year but I think if we were to take the CapEx back to the 30 billion level, we’d be more of a neutral level in '19. And then if you adjust crude prices to the strip, we’d probably be looking a little bit of a debt add in '19. I was just curious not so much whether or not you need to borrow a couple billion or pay back a couple of billion, but just understanding how you’re thinking about CapEx within the overall cash flow environment and then what that could mean for increased shareholder distributions presumably at this point just on the dividend front?

Sure. Let me kind of maybe just remind – reemphasize the priorities that we’ve got about capital allocation and how we’re approaching that. First and foremost, if you’re looking at the long-term value of our corporation particularly on the upstream side which is a depletion business, you’ve got to have a healthy pipeline of attractive investment opportunities. And that has been one of the things that I know over the last several years the management team here has really been challenging themselves with around reloading that pipeline and making sure that we got projects and project opportunities that go way up to the future to bring value in. And our intention would be to bring those projects on, consistent with our plans, irrespective of the price environment. And the reason for that is we built those projects and tested those projects to make sure they’re robust to a low price environment. So if we were to find ourselves in an environment where prices were low, that would actually I think benefit those projects in terms of as – as activity falls away in the industry, you tend to get lower cost construction. So that might play in our favor. But we would continue on that path. And then consistent with that and one of the reasons why we keep a balance sheet the way we do is to allow that to happen and not have to adjust the business up and down with the cycles. That makes for a very inefficient capital development. It also prevents you from taking advantage of the down cycle and a lot of the things that come positive from a down cycle. And so our strategy has always been to make sure that we’ve got robust capital structure to support continued investment at CapEx through the cycle, making sure we’ve got enough dry powder to take advantage of the down cycle if an opportunity presents itself, an acquisition opportunity potentially and at the same time make sure that our cost of leverage remains very competitive. And to do all that with investments, with our balance sheet, continue to fund reliable and growing dividend, we feel like that’s an important priority for a lot of our shareholders. So that’s kind of the equation. Then we get into buybacks and I’ll tell you – we’ve challenged ourselves on the investment front, we’ve challenged ourselves on our organization and our ability to effectively deliver the advantages that we have as a corporation and to bottom line results. I think you’ve seen changes there. And we’re also challenging ourselves around the optimum capital structure and what we want to – make sure that we’re leveraging the full advantage of that capital structure. That’s what’s going on and I’m very optimistic that we’ve got a very strong portfolio of investments that are backed up by very strong capacity and capability of the corporation.

Okay. Thanks for that. And maybe just as the follow up, as we think about maybe more dispositions coming from the upstream sector, how should we think about the cash flow that comes from that? Is that to reinvest in the upstream or do you think as you move forward, obviously nothing in Q1 probably, but as we think about the latter part of '19 and into '20, does the cash flow go to the balance sheet or is it CapEx supporting or is that maybe what you’re thinking about in terms of getting back to more of the historical shareholder returns?

I would say as we progress that divestment program and to the extent we have success finding buyers out there that put a value on it that we think is attractive for a transaction, we’re not waiting for that in order to fund our CapEx. Our investment program is not a function of waiting for cash to come. So I would not expect to see, as divestments progress, see that translate into additional projects in capital investment. That is an independent decision again related to some of the things I talked about in terms of the strength of the opportunities we’re looking for, which then says any addition cash would come in would came to the point I just made around the optimal capital structure and whether we pay that down in debt or whether we move it out as a buyback. And as I said we’re taking a real hard look at that and making sure that we’re striking the right balance there.

Your next question comes from the line of Jason Gabelman with Cowen.

Yes. Hi, guys. Just a couple of questions. Firstly on Guyana, what’s going on with the government there? I appreciate that you’ve already addressed this question a bit, but if I could push a little deeper. If there is kind of a pause in who’s running the government, are you, one, concerned that you may have to ramp down investments there; and two, is there somewhere else where you would put that money to work in if there is a potential pause or slowdown in the pace that your developing that asset?

Frankly, given the discussions that we’ve had since really coming to Guyana with the stakeholders that we’ve got across the political spectrum there, given the discussions about the advantages this development brings and the recognition of those advantages by a very wide constituency in Guyana, we really don’t have any concerns about the political dynamics that are happening there. We understand that that’s the nature of governments and countries around the world. We basically expect governments to change over time. Again, when you’re coming into a country for 30 plus years I think it would be extremely naïve to think that you’re only going to have one constituency there for the timeframe. So again, we take a very broad-based approach. I think all the feedback we’ve got, the alignment that we have in the country supports what we’re doing here because they recognize the value that it’s going to bring to Guyana. So real happy about that. And as I said, I think the phase 2 is on track, remains on track. We don’t see that coming off at this point. And obviously we’ll see how things develop there. But we’re not particularly worried about it given the value and the strength of that investment.

That’s very clear. Thanks. Secondly, just on capital spend and I appreciate the 2018 guidance that you provided. Do you have a view on 2020 and beyond is going to look like relative to the guidance you gave at your last Analyst Day?

Yes, Jason, I think I’m going to stick with the guidance we gave for 2019. I think in a month’s time we’re going to kind of layout the longer-term plan again consistent with the 2025 timeframe, talk about the upgrades that we’re seeing and the opportunities that we’re seeing and how we’re factoring that into the plan. And we’ll provide a better prospective at that time.

All right. Thanks a lot.

You’re welcome.

Next, we’ll go to Jason Gammel with Jefferies.

Thank you very much, gentlemen. My first question relates to the technology that you have deployed at the hydrocracker in Rotterdam. It seems to be a pretty significant uplift on margins relative to the old technology. I was just curious whether this is something that you will be able to deploy on a wider scale, or is there something unique about Rotterdam that really kind of restricts it to that location for now?

Thanks for the question. So what that development or that project in Rotterdam leverages is the catalysis and the technology we have, the advantages that we have in catalysis. And so that’s a unique application based on our understanding and our ability to develop unique value-added catalysts. Opportunities like that exist across the portfolio. Obviously it may involve different catalysts but we’ve talked about our Singapore project where we’re looking at upgrading heavy residue molecules. That would also look to leverage some of this technology and use some of this proprietary catalyst to make that conversion from a very low heavy, low value residue into higher value products, diesel and loose base stocks. So there is broader application. Obviously, it depends on the nature of the molecules that you’re trying to upgrade. But we feel – and that’s one of the reasons why we’ve challenged ourselves. For a long time we weren’t investing in the downstream because – and I can say this with a lot of intimacy because I was involved it in at the time, we weren’t going to put in kind of a bog standard industry technology and get industry returns. We were going to force ourselves to find technology that allowed us to get above industry returns. Rotterdam is a great example of that. I think Singapore will be another great example of that. And hopefully we’ll be able to share some additional examples as we move forward and find additional applications. I’m pretty optimistic.

Look forward to that. My second question also relates to the LNG portfolio. Can you discuss whether you were interested in participating in the expansion at Qatar LNG? And if so, how would that rank relative to the three other LNG opportunities that you have in the portfolio currently?

Yes, we got a very long-term presence and partnership in Qatar. I think we value that. It’s a good partnership. We’ve had a lot of success working with QP. I would certainly look to continue to extend that. I think we’re aligned to how we think about the business and the opportunity and value each other’s partnership. So yes absolutely interested in continuing to partner with that and to develop resources and opportunities in Qatar. It is a very low cost supply gas, which as you’ve heard me talk about is an important element and the LNG projects that we’re advancing. With respect to how that would fit into our portfolio, I’d come back to the discussion we’ve had. We are looking at these opportunities not on the basis of what we have in our portfolio but on the basis of what industry has in its portfolio. And we’re going to advance the opportunities that we think are advantage versus the rest of industry. If we can’t find an investment that does that even if it looks good in our portfolio, we won’t pursue it because frankly it’s going to have to compete on an industry wide basis and that is the hurdle that we’re using. We don’t want to make decisions based on what we have. We want to make decisions based on how competitive it will be in the industry and that applies not only to LNG but every other thing that we’re doing in this company from an investment standpoint.

I appreciate your thoughts, Darren. Thank you.

You’re welcome.

We’ll next go to Paul Cheng with Barclays.

Hi, guys. Good morning.

Hi, Paul.

Good morning, Paul.

First, I’d just want to say thank you to Neil Hansen to put in the page identified the large earning item impacting on the quarter that – we really appreciate on that. For Darren, a couple of questions. First, with your reorganization you talk about how that it may accelerate your asset sales effort. How about on the other side of the ledger on the acquisitions side? Is that going to have any meaningful impact? And also if you can comment on what you believe today in the market if the bid-ask environment is still too wide apart or you actually think that there’s a reasonable expectation on the environment at this point?

Okay. Thanks, Paul. I think it’s hard to – what I would tell you is the reorganization is definitely going to improve the focus that we have on both sides; divestments and acquisitions. So I would expect to see additional thinking and focus on opportunities on both sides of the ledger there. Whether that results in anything or any acceleration on the acquisition side is really difficult to tell, because frankly it comes to your second question which is the bid-ask spread. For us to pursue an acquisition it has got to have to bring some unique value to our shareholders. We’re not going to do a me too deal out there. And so I think what we have to look for is something that fits in the portfolio and allows us to leverage something unique to ExxonMobil which brings more value than on a standalone basis. And I think that’s going to be the key driver. I don’t think anybody’s out there looking to discount their business. And so it’s really got to find a way to bring some value there that doesn’t exist otherwise. And I think those opportunities are there. It’s just a function of finding them and seeing where the market goes and how willing sellers are and what their expectations are. So I’d just say we’re going to stay very focused on that and see what opportunities bring us.

Second question that I think digitalization seems to be the best word amongst some of your peers and some people may even try to quantify that how big is the potential impact of the saving to the business. But Exxon, given your technology that we were actually a little bit surprised that you guys haven’t really talked too much about that. And then when are you coming up with any quantification that how much it may mean to your business. Is that something that you can share on that? I’m sure that you guys all have the expert looking at that.

Yes, you’re right. We do. I think it is – some of our peers may have talked about a very high potential area, a lot of opportunity to bring additional value. We’ve got an organization dedicated at looking at that. I think one of the advantages that we have, that organization is looking across the entire portfolio. There are a lot of synergies when it comes to digital across our manufacturing and production platforms, across our operations and chemicals, downstream and the upstream. And so we think given our size, given the fact that we participate all along the value chain, the data that we have probably is the best in industry. And then our ability to mine and leverage that data to improve operations I would say our capacity continues to grow. We’re taking what I would say is a thoughtful methodical approach to it to make sure that we’re building structures and data structures and digital tools to allow us to do that in a comprehensive way across the globe and to leverage that value. And so it’s a very important area. I would not expect us to start putting numbers on that and sharing it. I think for us it’s an advantage. It’s going to be a competitive advantage. It’s one we’ll keep in-house.

I see. All right, very good. Thank you.

You’re welcome.

I think we have time for one more question.

We’ll take our last question from Pavel Molchanov with Raymond James.

Thanks for squeezing me in, guys. Just one question for me. You’ve alluded to the well-known regulatory issues at the Groningen field, but when we look at your total European gas volumes down 12% versus a year ago, even if we exclude Groningen there would be close to a double-digit decline. So what explains the continual declines in your North Sea gas outside of Groningen?

Well, we divested our Norway business last year and so that’s going to have a material impact and that’s probably what you’re seeing there. And then on top of that, obviously gas demand and gas production is very seasonal depending on weather and temperatures and that’s going to play into it as well.

Okay. Wasn’t this kind of a cold winter though in Europe?

Not if you look – it’s not if you look at compared to previous, no.

Okay. Thank you, guys.

You’re welcome. Thank you, Pavel.

Great. Thank you for your time and thoughtful questions this morning. We appreciate you allowing us the opportunity today to highlight our fourth quarter and full year that included strong earnings and cash flow performance supported by continued liquids growth and value capture from our integrated business model. We look forward to seeing everyone on March 6th at our Investor Day in New York. Again, we appreciate your interest and hope you enjoy the rest of your day. Thank you.

That does conclude today’s conference. We thank everyone again for their participation.