Exxon may trim production on higher prices

Exxon Mobil may trim its production targets in a meeting with Wall Street next week as the oil giant absorbs the impact of sustained $100-a-barrel oil, analysts said.

Since Exxon Mobil relies on production sharing contracts with oil-
rich countries to extract its crude, more expensive oil will likely limit the amount of petroleum it can supply to the world, analysts said.
These agreements are usually based not only on the amount of oil, but on the dollar value of petroleum taken out of the ground.

So with oil now holding at the $100 a barrel level, Exxon will manage to grow its profit while shaving its long-term production target of 3% average growth annually through 2010.

“They cannot have their cake and eat it too because of the high price of oil,” said Fadel Gheit of Oppenheimer & Co. “They may cut their total production target by as much as 4%, but they’ll be happy to boost profit by 20% or 30%. They’re willing to trade off lower production for higher prices.”

MarketWatch