Exxon Raises Budget Above $25 Billion as Costs Climb

(Bloomberg) — Exxon Mobil Corp., which recorded the biggest profit for a U.S. company last year, will raise 2008 capital spending to more than $25 billion to cope with escalating costs for drilling rigs and engineers.

The Irving, Texas-based company will increase spending on exploration, refineries and chemical plants by more than 20 percent from $20.85 billion in 2007, according to a presentation Chief Executive Officer Rex Tillerson provided for analysts today in New York.


Exxon Mobil expects to spend $125 billion during the next 5 years on pipes, vessels, exploration leases and other items, a 25 percent increase from Tillerson’s March 2007 forecast. With crude around $100 a barrel, competition to find untapped reserves has caused a worldwide shortage of rigs and crews.

“With energy prices where they are, there’s plenty of incentive to spend money to make money,” said Barry James, who manages $2 billion, including Exxon Mobil shares, as president of James Investment Research in Xenia, Ohio. “I’m glad to see them putting the money into growing the company instead of passing it all back in stock buybacks and dividends.”

Bloomberg