Doug Leggate: Appreciate your perspectives, guys. Thanks so much.
Operator: We’ll go next to Alastair Syme with Citi.
Alastair Syme: Thanks very much Darren and Kathy. Darren could you just make some sort of high-level comments about the competitive landscape you see across the business? I know this is sort of a broad question, but upstream Energy Products, Low Carbon Solutions, how do you see competitors’ behavior ?
Darren Woods: Sure, yes, this is obviously a real important focus area for us. And I may just maybe start with a broad strategy and philosophy that you’ve seen us executing here over the last five years. And as I mentioned on CNBC this morning, I think we see that paying off with respect to the profit margins and the improvements that we’re seeing in the profit margins. If we look at 2012, when we had extremely — our last — higher revenues than we’ve got today, we made more money this year with less revenues and that’s really a function of the improvement in net profit margin, where we went from about 10% net profit margin in 2012 to 14% in 2022. So, I think a reflection of the work that we’ve been doing to better position ourselves competitively.
If I go down each of the sectors that we’re in, I’ll start with the upstream where our emphasis has really been making sure that our — projects that we’re pursuing are advantage versus industry and very importantly, are on the left-hand side of the cost of supply curve. So, our strategy there is we can’t call the cycles, we can’t predict where the markets will go and over what timeframe. But we can control the cost of the barrels that we’re bringing on and making sure that irrespective of the environment that we find ourselves in, that we are competitively positioned, versus our competition, that and that our barrels are lower cost. And that’s been the strategy and then for the portfolio, where we don’t see some of those advantages is to exit those businesses in the hybrid portfolio.
That’s what we’ve been doing. I think you’re seeing the benefits of that. We’ve also been very focused on kind of leaning in when others lean out to use the language I used in the press release and that that I think, is paying off as well. And I think resource owners around the world recognize our commitment to that industry and our capabilities with respect to effectively producing barrels. So, I think that’s what we’re doing there, I think we’re very well-positioned. We got a really good portfolio, I think, competitive advantage portfolio. And not only in the cost of supply, but in the quantity and the quality of the projects that we’ve got there. In the Chemical business, it’s really around focused on performance project — products and making sure that we’re leveraging our technology to develop products that have a high value to customers and therefore a higher margin.
We build world-scale facilities, start them out on commodity grades, and then quickly upgrade those and fill — transition to performance products. That strategy continues to play out well. We’re continuing to see a lot of poll on our performance products and so that’s our strategy there and we continue to invest in that high-end high-value product slate in the Chemical business. In refining, it’s really around evolving the yield and the products that we make in our plants. I think contrary to maybe some of the conventional wisdom out there, we actually think the refineries that we’re investing in position as well for again, a very uncertain future continuing to make the products that society meets needs today and doing that across a very diversified slate of products.
So, think chemicals, fuels products, and lubricants. And then at the same time investing to produce low emissions fuels to address the low carbon demand. And as that piece of the market picks up, we’ve got a really good competitively advantaged base to shift that production. And you see us doing that the Strathcona project is one example. But we have many, many other concepts in mind to transition, our refinery production in line with that demand evolution. And it’s really just a function of pacing. And again, I think that advantages versus the rest of competition, big refining footprint that’s going to be needed for these heavy advantaged in making low emissions fuel. So, I think we’re well-positioned there. Our Chemical business is well-positioned with the technology and the performance products that were making.
So, think we’ve got a leg up in that space. And then finally low carbon solutions, there’s a lot of activity in this space, a lot of interest, particularly with the IRA here in the US. But more generally, around the world, I think, a real focus on low carbon opportunities. I think we’re very well-positioned there. This is not a game for startups. This is — these are large world-scale projects that require the kind of project expertise that we have require the kind of size and balance sheet capacity that we have, requires the technology and operating experience that we have. So, there’s a lot of, I’d say, skills and capabilities needed in this market that lend themselves and are consistent with our capabilities and advantages. So, I think it’ll take a while for that to shake out, but I am convinced that we are very well competitively positioned in the low carbon solutions business.
And if you think about security of supply and counting on your partner to say sequester carbon for 100 plus years, I think you’re going to want somebody who’s been around for a while and knows how to do that. I think we’re the company to do that. If you want somebody who’s going to guarantee that when they say they’re going to have the barrels available to you, they’re there. I think people will look to ExxonMobil to deliver on that. I feel pretty good about our position as well.
Alastair Syme: Thanks very much.
Darren Woods: Thank you, Alastair.
Operator: We’ll go next to Stephen Richardson with Evercore ISI
Stephen Richardson: Thanks. Couple for Kathy, if I may. One is wondered if you could just address the balance sheet and how we’re thinking about the differences in the cycle. So, obviously, significant deleveraging and at 5% net debt to cap, I know that’s not your target, but it is notable. So, just wondering if you could address at what point do you start to think of the balance sheet as a bit of a drag and also your willingness to kind of continue to delever here acknowledging that there was a long time in the corporation’s history where the balance sheet was effectively unlevered? Thank you.
Kathryn Mikells: So, I would start by saying we view our balance sheet very much as a competitive advantage, right and we know that during the upper part of the cycle, we’ve got to build a fortress balance sheet, to make sure we have all the firepower we need, and all the flexibility we need to then manage the downturn, which will inevitably come. So, that’s how we think about the balance sheet. I think we’ve made terrific progress. I mean, if you look overall, this year, we paid down about $7 billion of debt, you already mentioned that our net debt to cap is about 5%. We obviously also learned a number of lessons during the pandemic and we have said, we have a willingness to carry a higher cash balance. Our cash balance is around $30 billion right now.
So, I’d say overall, at any given point in time, our cash balance is ultimately going to depend on how the market environment ensues. But we know having a really strong balance sheet is a competitive advantage for us. We’ve been very clear about our capital allocation priorities and at the very top of that priority list is making sure we’re consistently investing in advantaged projects, right. We’re in a quite good position in terms of having a very rich portfolio of advantage projects, which we’re bringing forward. And I think we’ve taken a very balanced approach and ultimately how we’re sharing our rewards with shareholders in 2022, we ended up distributing about $15 billion in dividends and $15 billion in a share repurchase program. So, ensuring that we just have sustainable growing competitive dividends and efficiently returning cash to shareholders.
So, that’s how we think about it. And we are at the part of the cycle where you would expect us to see a very strong balance sheet, and we’re very focused on ensuring that that’s indeed what we have.
Operator: We’ll got next to Sam Margolin with Wolfe Research.
Sam Margolin: Good morning. Thanks for taking the question.
Darren Woods: Morning Sam.
Sam Margolin: I’ll ask about M&A actually, because you’re describing a number of advantages that are that are very unique to ExxonMobil, not just at a corporate level, but even in individual asset classes, for example, that you might be in the early stages of efficiency and productivity gains in the Permian, which is really different than a lot of other operators are saying. So, it seems like a opportunity to consolidate and create a lot of value, but at the same time, there’s other countervailing forces against that. So, maybe at this point, it would be it’d be great to just hear your thoughts on the overall M&A landscape and what kind of opportunities you see? And then also in the context of Kathy’s comments on the balance sheet, which is obviously set up very well right now. Thanks.
Darren Woods: Yes, sure. Thanks Sam, I’ll touch on that and maybe — see if Kathy has got anything to add. I think the point that you make is exactly the right one, which is looking at where we can take advantage of our capabilities and skills to bring additional value to acquisition targets. And that’s really where we put our focus is where can we leverage what we what we’re good at and bring value above and beyond what potential acquisition would be able to do without us. That’s the focus area. And I think we are in the area that you talked about, we do think with time, the work we’ve been doing in the Permian will provide a value opportunity that we can leverage when we win the markets, right. And I think expectations start to align around values from a buyer standpoint, as well as a seller standpoint.
And so there’s an element of that where it’s difficult to go in and buy at the top of a commodity cycle. You tend to want to — at least I want to focus in on when you when you see more, I’d say longer term price cycles being priced into assets, that’ll be one of the functions or one of the things that you’ve got to consider in this space. But it really is we continue to look for where we see the opportunity of bringing value for undeveloped resources in the Permian. I think in a Low Carbon Solutions space, it’s a very early business, there aren’t a whole lot of opportunities there in that space, but with time that could develop and, obviously, it’s challenged in the Chemical space with respect to the technology that we bring to bear on existing assets, but it’s something that we continue to look at.
Kathy anything to add there?
