Exxon CFO puts cost of exiting Russia at 1% to 2% of output and earnings

Exxon Mobil Corp’s decision to leave Russia and discontinue oil and gas operations will hit earnings, oil production “any stat you chose” between 1% and 2%, its finance chief said on Wednesday

Chief Financial Officer Kathryn Mikells provided the estimate to Wall Street analysts during its annual financial outlook, without citing a specific metric. She did not offer any details on a potential writedown on its nearly $4.1 billion in assets.

“Of any stat you choose, it’s kind of 1% to 2% of the total denominator, but that’s what it is,” Mikells said during an investor call which stressed the company’s ability to increase profit and cash flow at oil prices well below the current level.

Exxon holds a 30% stake in a oil and gas production project as part of a consortium that also includes Russia’s Rosneft, and Japanese and Indian companies. The group last year pumped an average of 220,000 barrels per day oil.

Western sanctions imposed on Russia for its invasion of Ukraine “will degrade” Exxon’s ability to retain its assets in the country and “require a discontinuation of operations or suspension,” Chief Executive Officer Darren Woods said.

It was the first time the company suggested the potential to suspend its Russia business. But Woods added: “We are beginning a process to discontinue operations and then developing steps to exit.”

An exit will require time to ensure that the operation is handed over successfully without incidents and maintain its environmental integrity, he said.

“It’s a complicated process. One that is going to require careful management and close coordination with our consortium partners.”

Exxon could double its pre-pandemic earnings and cash flow by 2027 through new cost cuts and an ongoing reshuffling of its oil and gas properties, said Mikells. The estimate includes an additional $3 billion in cost cuts and an about 25% reduction in its about $41 per unit cost to produce each barrel of oil.