Obviously lithium is an important part of the transition going forward in electrification and the need for batteries and storage of power and energy, and so we’ve looked at that space and clearly with the opportunity at Smackover and the ability to drill, extract the lithium from the brine water and re-inject that, it’s got a much lower environmental impact than the current production process for lithium. It fits very well with our capabilities and on the cost of supply curve, it’s very competitive, so it looks attractive, and the challenge that we’ve been giving to Dan and his team is to develop a business plan where that becomes material with respect to what Exxon Mobil–Exxon Mobil’s portfolio, and effectively competes for capital.
As Dan and his team develop that concept and that potential business, that’s looking more and more promising, and we see an opportunity to really leverage the things that we’re pretty good at in the base case, and it’s very synergistic with our traditional businesses. I think when we come out and talk about the plan, we’ll talk more about where we see the lithium business going, but it looks fairly promising at this stage. I would just say, the aperture’s wide open. I think for a long time, we’ve been characterized as an energy company, and that almost discounts what is one of the world’s largest chemical businesses, which we feel pretty good about. It comes back to this fundamental capability of managing and transforming hydrogen and carbon molecules to products that the world needs and leveraging our capabilities, and lithium fits into that along with our other businesses in bio-fuels, hydrogen, carbon capture and storage.
We’ll continue to develop those, and again, as I said earlier, seeing that opportunity space and the opportunity to generate higher return projects is looking more and more promising, so I would expect that to be part of the portfolio going forward.
Jason Gabelman: Great, that’s really helpful. Thanks.
Operator: The next question is from Ryan Todd of Piper Sandler. Your line is open, please go ahead.
Ryan Todd: Thanks. Maybe one follow-up on some of the earlier Permian conversation. You were always known as developing your side of the Permian on a very long term plan. You’d built out a lot of infrastructure early on. On the infrastructure side, as you think about this post the Pioneer transaction on infrastructure, do you have the combined infrastructure in place that you need to arrive at the 2 million barrels a day of combined production? Will this require any additional infrastructure spend or any shift around in how you think about things versus previously anticipated, and maybe just any comments on whether you see any potential bottlenecks in the basin over the next few years.
Neil Chapman: Yes Ryan, it’s Neil. I’ll take that question. I think as you’re aware, there is a big difference between the Delaware and the Midland Basins. The Midland Basin has got far more mature infrastructure, and I would say that Pioneer has done an exceptional job in both developing and acquiring and contracting both infrastructure to exit product and for water. It’s quite a difference versus the Delaware. Of course, in the Delaware, we had to put in that infrastructure in place. We did it at scale, we built this large central processing facility called Cowboy. We currently have a capacity there of about 250,000 barrels a day of crude and about 400 Mcfd of gas. We plan to expand that. In the Midland, most of that infrastructure already exists.
There is always going to be incremental investment, but nothing like the scale, Ryan, that we have seen in the Delaware. I feel very good about the infrastructure we’ve put in place in the Delaware, and we made that investment upfront. We talked about it in 2018 and 2019, and we’re clearly benefiting from that investment that we made now. Quite a contrast in the Midland.
Darren Woods: Yes, I would add to that, if you go back in time, as we were looking at the integrated value chain, we were certainly focused on the molecules that we were producing in the Permian but we also recognized it was an opportunity for us to take advantage of the geographic locale and the proximity to our facilities in the Gulf Coast to optimize broader Permian production, and so we built the logistics systems, pipeline systems and the capability within our facilities to manage that. What we’re now going to be bringing into the portfolio in the Midland fits very well with this broader play of an integrated value chain and making sure that we’re maximizing the value of those molecules through our own facilities. As we said early on when we first introduced this deal, that piece of the equation, which we believe there is a value opportunity on in terms of better managing the molecules from end to end, from the crude clear through to the finished products, we believe there’s additional opportunity there.
We’ve got to get in and work through the details of that. My view is that’s additional upside to what we’ve been talking about. It’s one I feel really good about and the one that, frankly, we anticipated early on by making sure that we’d built the capacity ahead of actually needing it for our own molecules, so we’re in a very good position there.
Neil Chapman: And Ryan, I didn’t answer your question – do we anticipate any bottlenecks, and the answer to that is based on what we have seen so far during the transition work and the due diligence, the answer is no, we don’t see any bottlenecks in getting to the production levels that we anticipate.
Ryan Todd: Thank you.
Operator: The next question is from Neal Dingmann of Truist Securities. Your line is open, please go ahead.
Neal Dingmann: Good morning, thanks for the time. Darren, maybe for you or Kathy, my question is on shareholder return. It looks like you paid out a bit over 100% of free cash flow following the prior quarter – I think you were closer to even higher than that, maybe about 118%. I’m just wondering, when you think about shareholder return, will you continue to lean into the buybacks as you look in the out years, or maybe just if you could give a little bit of color. I think I understand your role, your thoughts on the dividend side, so maybe I’m asking a bit more on the share buybacks going forward. Thank you.
Kathryn Mikells: I’m happy to take that. If you look at our overall free cash flow results in the quarter, it was just under $12 billion at $11.7 billion, and we paid out $8.1 billion to shareholders, and that was between $3.7 billion in dividends and $4.4 billion in the share repurchase program. In fact, in the quarter our cash balance actually went up $3.4 billion, and we ended the quarter at $33 billion, so I think you can see that in the quarter, we were in fact well under 100% in terms of what we paid out, which is what enables us to grow our cash balance and strengthen our balance sheet even further. You know, when you look overall at our approach to capital allocation, our priorities continue to be the same. First and foremost, let’s make sure we’re investing in advantaged projects that are differentiated, are going to drive high returns for our shareholders.
We do that both organically and, as you’ve seen recently, inorganically as well, making sure we’re maintaining a really strong balance sheet – we need that. Ultimately at some point, the cycle will turn against us and that balance sheet will be there for us to lean into, and being balanced in our approach as to how we share the success of the company and those rewards with our shareholders. I think you can continue to see that balance coming through between dividends and share repurchases. We’re looking to be more consistent in our share repurchase program – again, I think you’re seeing that. We continue to say we’re on track to execute $17.5 billion of share repurchases this year. We’ll complete that before the end of the year and we already have a program in place, a similar program in place for 2024, so we’re trying to get that balance right.
It’s important that we continue to maintain a strong balance sheet that can carry us through the cycle.
