Exxon Mobil Corporation (XOM) Q3 2017 Earnings Conference Call Transcript

ExxonMobil Corporation (NYSE: XOM)
Q3 2017 Earnings Conference Call
Oct. 27, 2017, 9:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, everyone, and welcome to this ExxonMobil Corporation third-quarter 2017 earnings call. Today's call is being recorded. At this time, I would like to turn the call over to the Vice President of Investor Relations and Secretary, Mr. Jeff Woodbury. Please go ahead, sir.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Thank you. Ladies and gentlemen, good morning and welcome to ExxonMobil's third-quarter earnings call. My comments this morning will refer to the slides that are available through the Investor's section of our website. Before we go further, I'd like to draw your attention to our Cautionary Statement shown on slide 2.

Turning now to slide 3, let me begin by summarizing the key headlines of our third-quarter performance. ExxonMobil earned $4 billion in the quarter, bringing year-to-date earnings to $11.3 billion. Earnings rose 50% from the prior year period as commodity prices improved and business performance strengthened. All three business segments delivered solid results, generating cash flow from operations and asset sales that exceeded dividends and net investments for the fourth consecutive quarter. These results were achieved as the company worked to safely bring our Gulf Coast manufacturing operations back online following the devastating effects of Hurricane Harvey. In addition, we continued capturing attractive opportunities across the value chain, from securing high-potential exploration acreage to logistics investments to expanding chemical capacity in growing markets. I'll highlight these items in more detail later.

Moving to slide 4, we provide an overview of some of the external factors affecting our results. Overall, global economic growth was modest in the quarter. The eurozone and Japan experienced slower economic expansion along with the U.S., which was negatively impacted by hurricanes. In China, economic expansion remained steady compared to the previous quarter. The commodity and price environment was next, as crude oil prices increased, but natural gas prices were flat to down. Global rig count increased slightly, driven by higher activity in North America. Refining margins improved with stronger global distillate demand, while global chemical commodity margins softened, driven by increases in feed and energy costs.

Turning now to the financial results on slide 5. As indicated, ExxonMobil's third-quarter earnings were $4 billion, or $0.93 per share. In the quarter, the corporation distributed $3.3 billion in dividends to our shareholders. CapEx was $6 billion, reflecting increased activity in the completion of the Jurong Aromatics plant acquisition. As previously indicated, this facility provides added value to integration with our existing world-class petrochemical facilities in Singapore, which are well placed to meet growing regional demand. Cash flow from operations and asset sales was $8.4 billion, more than a billion higher than the last quarter. Cash totaled $4.3 billion at the end of the quarter, and debt was $40.6 billion, down $1.3 billion from the prior quarter.

Next slide provides additional detail on sources and uses of cash. Total of the quarter, cash balances increased from $4 billion to $4.3 billion. Earnings, adjusted for depreciation expense, changes in working capital and other items, and our ongoing asset management program yielded $8.4 billion of cash flow from operations and asset sales. Note this includes a working capital build of approximately $1 billion related to Hurricane Harvey. Uses of cash included shareholder distributions of $3.3 billion and net investments in the business of $3.4 billion. Debt reduction and other financing items decreased cash by $1.4 billion.

In the third quarter, ExxonMobil did not make any share repurchases to offset dilution related to our benefit plans and programs, and we don't currently plan on making additional purchases to reduce shares outstanding in the fourth quarter.

Moving on to slide 7 for a review of our segmented results. ExxonMobil's third-quarter earnings increased $1.3 billion from a year-ago quarter, driven by stronger Upstream and Downstream results and lower corporate charges from favorable tax items. Although corporate and financing charges have been trending below our guidance range in recent quarters, we expect fourth-quarter corporate charges to be toward the high end of the $400 to $600 million guidance. I'll note that our corporate effective tax rate for the quarter was 33%, up from 20% a year ago, reflecting changes in our segment earnings mix and other one-time tax items.

Turning now to the Upstream financial and operating results, starting on slide 8. Third quarter Upstream earnings were $1.6 billion, an increase of nearly $950 million from the prior-year quarter, driven by higher realizations. Crude prices rose nearly $6.50 per barrel versus a year-ago quarter, while gas realizations increased about $0.60 per thousand cubic feet. Volume and mix effects increased earnings by $20 million. All other items increased earnings $7 million driven by lower operating expenses, which were partly offset by unfavorable foreign exchange impacts. Upstream unit profitability for the quarter was $4.53 per barrel, excluding the impact of non-controlling interest volumes.

Moving to slide 9, oil-equivalent production in the quarter was 3.9 million barrels per day, an increase of nearly 2% compared to the third quarter of 2016. Liquids production was up 69,000 barrels per day. Favorable volume impacts from projects, work programs, and reduced downtime, were partly offset by field decline and lower entitlements. Natural gas production decreased 16 million cubic feet per day as project and work program volumes were more than offset by field decline, lower demand, and regulatory impacts in the Netherlands.

Moving now to the Downstream, financial and operating results on slide 10. Downstream earnings for the quarter were $1.5 billion, up $300 million compared to the third quarter of 2016. Stronger refining margins, primarily distillate and gasoline, increased earnings by $1 billion. Unfavorable volume and mix effects decreased earnings by $160 million mainly due to lower throughput from Hurricane Harvey, partly offset by improved operations. All other items reduced earnings by $550 million, reflecting the absence of favorable asset management gains of $380 million related to the sale of Canadian retail assets in third quarter of 2016 as well as expenses related to the hurricane.

Now moving to Chemical financial and operating results on slide 11. Third quarter Chemical earnings were $1.1 billion, down $79 million compared to the prior-year quarter. Weaker commodity margins driven by increased feed and energy costs decreased earnings by $200 million. Higher product sales driven by increased demand, new capacity, and improved operations increased earnings by $120 million. All other items in the quarter including costs associated with Hurricane Harvey and expenses from new production units in Saudi Arabia and Singapore offset in part by favorable foreign exchange effects.

Moving now to slide 12 for an update on our hurricane recovery efforts. Hurricane Harvey had devastating impacts for many of our employees, contractors, and the communities in which we live and operate. Nonetheless, our highly dedicated people and effective operations integrity systems permitted a safe shutdown of our refining and chemical operations in Baytown, Mont Belvieu, and Beaumont. Because of advanced planning and preparation, we were able to protect the infrastructure of our manufacturing plants and were well positioned to resume operations in a timely fashion. Refining and chemical operations at these sites are now back to normal. Following the storm, we worked closely with our partners and customers who sell our brand and products to maximize fuel supplies to consumers and emergency responders. We acted quickly to bring in gasoline, diesel, and jet fuel from other regions in the U.S. and abroad to supplement our production, ensuring the return of reliable supply to our customers.

Our Upstream operations, fortunately, experienced limited impacts with some offshore platforms temporarily shut in. Overall, Hurricane Harvey had an estimated unfavorable impact on third-quarter earnings of $160 million and a debit of $0.04 per share. ExxonMobil employees continue to dedicate their time and resources to support the community's impact by the storm, and we are proud our employees have provided hands-on assistance with flood relief, and we continue to support them in their efforts.

Moving to slide 13, we're making good progress on further strengthening our portfolio in South America with high-potential opportunities. First, in Guyana, we announced our fifth offshore discovery with the successful Turbot well. The well encountered 75 feet of high-quality oil-bearing sandstone reservoirs and is located approximately 30 miles to the southeast of the Liza Phase 1 project. Evaluation of the discovery is underway. Importantly, this success proves a new play and helps to de-risk multiple plays in the Turbot area. We plan to drill an additional well in the new year to help delineate this discovery. The rig is now moving to the Ranger prospect, which is another new play test on the Stabroek Block.

In Brazil, we are pleased to have secured an attractive offshore acreage position, winning 10 Blocks in the September bid round and completing a farm-in on two additional Blocks. Each of these Blocks is under a concession contract. In the highly perspective Outer Campos pre-salt, ExxonMobil was jointly awarded six Blocks with Petrobras. Each partner holds 50% working interest, with Petrobras as the operator. ExxonMobil was also awarded an additional two Blocks in the Northern Campos Basin with 100% working interest.

In the Sergipe-Alagoas Basin, ExxonMobil recently farmed-in with Murphy on two Blocks held by QGEP. We then jointly bid with this co-venture group and were awarded two additional Blocks in the same basin. For all four of these Blocks, ExxonMobil will operate and hold a 50% working interest. The 12 Blocks combined offer promising deep-water exploration potential. The Campos Basin Blocks are an extension of the pre-salt play where multiple world-class discoveries have been made. We have identified multi-billion barrel prospects on our own existing high-quality seismic data over these Blocks and look forward to working with the government and our partners to progress exploration plans. We anticipate commencing exploration activities in 2018 with 3D seismic acquisition and then drilling in 2019.

Turning now to slide 14 for an update on our efforts to further enhance business integration for our growing attractive resources in the Permian Basin to our Gulf Coast manufacturing hubs. As you know, we continue to expand our acreage position in the Permian using strategic trades and acquisitions. Since the Delaware acquisition in the first quarter of this year, ExxonMobil has executed another five acreage transactions, adding a combined total of 22,000 operated acres for an implied cost of about $20,000 per acre. This acreage is contiguous to our core positions, making it ideal for capital-efficient development using long lateral wells and adds more than 4 million oil-equivalent barrels of low-cost resources.

We're also expanding logistics access and flexibility to capture value from wellhead to premium fuels and chemical products. Earlier this year, we completed the formation of the Permian Express Partners pipeline joint venture with Energy Transfer partners. In addition, in July we concluded an agreement with Summit Midstream Partners to create a new natural gas gathering and processing system servicing production from our acreage. Earlier this month, we further enhanced our logistics capabilities with the acquisition of a crude oil terminal in Wink, Texas, from Genesis Energy. This acquisition marks ExxonMobil's first terminal in the Permian Basin to be anchored by the company's recently acquired Delaware acreage.

Terminal is strategically positioned to handle Permian crude oil and condensate for transport to Gulf Coast refineries and marine export terminals. Facilities interconnected to the Plains Alpha Crude Connector pipeline system and is permitted for 100,000 barrels per day of throughput with the ability to expand. Terminal provides crude producers with a full range of logistical options, including truck, rail, and inbound and outbound pipeline access, establishing ExxonMobil as a key midstream provider in the rapidly growing Permian Basin. These logistics investments support ongoing manufacturing investments to increase feed processing flexibility and capacity for higher-value products in our Downstream and Chemical businesses. Our leading presence in the Permian from equity production through to Gulf Coast refining and chemical capacity positions us for world-class development across the value chain.

Moving to slide 15, the graph on the right shows our progress to date compared to the unconventional liquids volumes forecast we provided at our Analyst Day in March. Our total unconventional production from the Delaware, Midland, and Bakken Basins is now over 200,000 oil-equivalent barrels per day. We are currently operating 20% or 20 rigs in the Permian and will continue to ramp up to approximately 30 operated rigs by 2018. We are leveraging our contiguous acreage position to drill long lateral wells targeting industry-leading unit development costs. The wells drilled in the Midland this year average about 10,000 lateral feet, well above industry average.

We continue to work with our dedicated innovation and technology team to improve our efficiency. We told you last quarter about drilling our first 12,500-foot lateral well in the Delaware, and this well was just brought on production. By leveraging our learnings in the Bakken where we recently fractured the first of several three-mile laterals, we will start drilling our first three-mile lateral in the Permian before year end. ExxonMobil's best-in-class operational expertise allows for more efficient drilling and completions, which in turn enables us to enhance value through our operated investments. We'll continue to incorporate learnings to lower unit costs as we grow our unconventional liquids at a 20% compounded annual growth rate through 2025, underpinned by near-term annual growth in the Permian at about 45%.

Turning now to slide 16. The summary of the corporation's year-to-date sources and uses of cash highlights the solid performance of our business segments, which enables the company to meet its commitments to our shareholders. As shown, year-to-date 2017 cash flow from operations and asset sales of $24.4 billion funded shareholder distributions, net investments in the business, and a reduction in debt. In addition, we continue to generate free cash flow while selectively investing in the business and maintaining capital discipline. This quarter marks the fourth consecutive quarter where free cash flow has exceeded distributions to our shareholders since the significant drop in oil prices.

Moving now to the final slide. I'll conclude today's presentation with a summary of our year-to-date performance. Simply put, we continue to remain focused on long-term value growth. Our integrated business has grown cash flow from operations and asset sales to over $20 billion, an increase of over 40% compared to the first nine months of 2016. Our business segments have collectively earned over $11 billion, an increase of over $5 billion compared to the first nine months last year. Upstream production volumes are within our guidance range at 4 million oil-equivalent barrels per day. We continue investing in and capturing new high-quality opportunities across the value chain but remain disciplined in capital allocation while delivering best-in-class execution. This has resulted in total capital expenditures year-to-date of $14.1 billion.

Finally, our year-to-date free cash flow of $13.5 billion more than covered our reliable and growing shareholder distributions of $9.7 billion. In short, we remain confident that our integrated business is well-positioned to delivering long-term value for our shareholders. That concludes my prepared remarks, and we'll now open it up to your questions.

Questions and Answers:

Operator

Thank you, Mr. Woodbury. The question and answer session will be conducted electronically. If you would like to ask a question, please do so by pressing the star key followed by the digit 1 on your touchtone telephone. We request that you limit your questions to one initial with one follow-up so that we may take as many questions as possible. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Additionally, please lift your handset before asking your question. We will proceed in the order that you signal us, and we will take as many questions as time permits. Once again, please press star-1 on your touchtone telephone to ask questions.

We will first go to Doug Leggate from Bank of America.

Doug Leggate -- Bank of America -- Analyst

Thanks. Good morning, everyone. Good morning, Jeff.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Good morning, Doug.

Doug Leggate -- Bank of America -- Analyst

Jeff, the capital expenditure year-to-date continues to look quite light relative to your guidance. I wondered if you could just speak to whether you really expect to catch up at the back end of the year, and also maybe the $25 billion indication you gave for 2018. I guess what's at the back of my mind is that the Permian has a very low-cost offset to whatever you think the portfolio decline is, and it seems to us your capital flexibility's a lot better than perhaps your guidance suggests.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah. Well, Doug, as you said, our year-to-date expenditures on CapEx is trending lower at this point, but we still have our guidance at $22 billion. You may recall that our objective is to go ahead and close the transaction for the Mozambique Area 4 acreage before year end, and that's still the plan. That was about $2.8 billion. At the same time, we have also ramped up some activity in our unconventional business, and, of course, we've got the Brazil transactions that we just consummated. All that really leads us to the view that the guidance is appropriate.

Doug Leggate -- Bank of America -- Analyst

To be honest, I didn't -- oh, go on. Go on. I'm sorry.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Looking forward into 2018 and thereafter, of course, we'll go ahead and provide an update before 2018 gets there, but you know, our plan is still -- and I would assume that our CapEx is linear over that timeframe. I think we showed $70 to $80 billion over 2018 to 2020, but it is gonna be within the general ballpark of about $25 billion dollars, plus or minus. Like I said, we'll go ahead and provide an update here early next year.

Doug Leggate -- Bank of America -- Analyst

Sorry, I didn't mean to interrupt you, Jeff, but just to be clear, first of all, I didn't realize that Mozambique did not close, and that explains it, perhaps, but would the $25 billion number next year also include acquisitions?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Well, you know Doug, we tend to leave a little flexibility in the budget to pursue opportunities that come up, but we'll give you, if there's something that we believe is fairly close and certain, we typically would include it. If it's not at a point where we believe it's gonna close, we typically do not.

Doug Leggate -- Bank of America -- Analyst

Okay, thank you. My follow-up is not gonna be too predictable here, but is Guyana. Your comments on Turbot. I guess my understanding is the rigs stayed on location several weeks after you disclosed the result. One wouldn't expect you to do that on a small discovery, so I wonder if you could speak to what you're thinking in terms of scale of the greater Turbot area, and maybe an update on how you're thinking about the coincident timing of multiple phases in Liza Payara, and I'll leave it there. Thank you.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah, sure. Again, as you would expect that we are very pleased with the Turbot discovery. We do plan, as I may have indicated previously, but we do have a plan going back and drill a follow-up well in 2018. The important message on Turbot is it did confirm a new play, different depositional environment, and there's still a lot of work to be done. It's early days in order to assess it, but there were a number of follow-up plays in this area that allows us to go ahead and better define and potentially go ahead and assess. As you go forward, to your second question about the subsequent developments, what I would tell you is that obviously, we're very encouraged by the results in Guyana. We had previously given you a range of about 2.3 to 2.8 billion barrels of recoverable resource. Obviously, the Turbot results puts us toward the higher end of that, and we will certainly, as we better define Turbot, we will certainly refine our resource range.

Given those results, we have had active development planning for subsequent phases in progress. I would say given the significant expiration success to date that we are considering at least two more phases, Phase 2 and Phase 3 for Guyana, and we are also considering higher processing capacity for the ships. Now, of course, as we continue our parallel exploration program, that will be integrated into our development planning efforts and things may change. Very positive progress, and certainly a very important component of our portfolio going forward.

Doug Leggate -- Bank of America -- Analyst

Okay, Jeff. I'll leave it there, but I just wondered if you could give us some idea as to when you would expect to FID the subsequent pages, and I will leave it there. Sorry to extend the question.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Well, I really don't have -- I certainly appreciate the interest, Doug, and I really don't have a timeline at this point. We're looking at all the various options, but given the progress we've made, I mean, you can appreciate with the Phase 1 development, that was a best-in-class five-year from discovery to start-up, and the extent that we can continue to capture, if you will, design-one-build-many concept, we'll want to keep on a fairly good pace going forward. Okay?

Doug Leggate -- Bank of America -- Analyst

Thanks, Jeff.

Operator

We'll now go to Doug Terreson from Evercore ISI.

Doug Terreson -- Evercore ISI -- Senior Managing Director and Head of Energy Research

Good morning, Jeff.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Good morning, Doug.

Doug Terreson -- Evercore ISI -- Senior Managing Director and Head of Energy Research

Around this time of the year, companies often reassess strategies and pay incentives to reflect changes in competitive and corporate governance environments. On this point, ExxonMobil has historically emphasized returns on capital employed and free cash flow and show their distributions, and these metrics have very strong correlations to total showed of return, which is obviously a good thing, especially in relation to some of the growth metrics. Simultaneously, ExxonMobil's stock is flat versus a decade ago, and relative performance versus energy peers is mixed, and so it kind of begs the question whether a change in the mix or weightings of incentives is needed or whether a more challenging peer group, which might include S&P 500 as a peer, is done might be beneficial to shareholders, too. So, can you comment, Jeff, on how the company thinks about these issues given the performance of the stock over the past decade and how important this topic is internally in the grand scheme of things?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah. Well, Doug, as we've talked in the past, I'll just reinforce for the broader group that it is very important, and the fundamental principle for executive compensation structure is to tie a large component of the compensation to the same performance that our shareholders will experience. So, we have one of, if not the longest, incentive programs in terms of investing. Again, that whole ultimate compensation is driven by how the stock will ultimately do. As you know, we're in a business that has very long cycle times on returns because of the magnitude of the investment, and we want to make sure that we hold our executives to the decisions that they made over a long period of time. So, we have a very large part of the compensation that is performance-based that is tied directly to the share's performance. As you said, there are other parameters that the Board considers, and return on capital employed and safety performance are two of the seven key criteria.

Doug Terreson -- Evercore ISI -- Senior Managing Director and Head of Energy Research

Yeah, you definitely seem to be using the right metrics, I just wonder if the weightings could be reset or what have you. Anyway, I also had one other question, Jeff. You guys announced a pretty meaningful asset sale, if I read this correctly. Can you talk about how it affected the published earnings number of $0.93 per share in the quarter?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

You mean the overall asset proceeds?

Doug Terreson -- Evercore ISI -- Senior Managing Director and Head of Energy Research

Yes. Is there any gains and losses we should know about that were meaningful?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah. So, overall, from an earnings impact, it is actually a quarter-on-quarter decrease, a quarter-quarter decrease on earnings by about just over $300 million. On the overall proceeds, you know, in the release, it was about $850 million, and a lot of that in the third quarter was really associated with a receivable that we had due in Papua New Guinea.

Doug Terreson -- Evercore ISI -- Senior Managing Director and Head of Energy Research

Okay, I see.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Okay.

Doug Terreson -- Evercore ISI -- Senior Managing Director and Head of Energy Research

Okay, Jeff. Thanks a lot.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Alright, thank you, Doug.

Doug Terreson -- Evercore ISI -- Senior Managing Director and Head of Energy Research

You're welcome.

Operator

Our next question comes from Evan Calio from Morgan Stanley.

Evan Calio -- Morgan Stanley -- Managing Director, Research Division

Good morning, Jeff.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Good morning.

Evan Calio -- Morgan Stanley -- Managing Director, Research Division

Yeah, maybe another strategic question to start. Peak oil demand driven by EV penetration is increasingly captivated investor attention, and it does represent a medium- to longer-term challenge. I know that you expect on your macro work to see demand growth for decades, yet has the risk of peak oil demand altered in any way, or how is that considered in your gating process for both Upstream and Downstream products -- or projects? Sorry. Especially given the depth in your portfolio.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah. You know, Evan, this is a very important question and probably one that can take a lot of time to describe. For us, it really starts with the annual update of our energy outlook. That is fundamental to providing us insights around our business strategy and our investment planning. If I very quickly summarized that oil demand is primarily driven by three components: light-duty vehicle consumption, heavy-duty consumption, and petrochemicals. What's really driving that growth are the latter two: petrochemicals and heavy-duty consumption. Right now, there's not a sufficient alternative to replace those energy sources because of the energy intensity requirements. Now, our energy outlook assumes on light-duty vehicles that we will reach a peaking gasoline demand and come down, and that's driven by two things: it's driven by efficiency of ICE, internal combustion engines, as well as greater hybrid and EV penetration into the marketplace.

So, the bottom result of all this is that we do look at variations in the EV penetration, and if you look at our forecast right now, we have by 2040 the fleet is about 6% EV. If you were to increase that by 50%, that would have a liquids demand impact of about a half a million barrels a day. So, not substantial when you think about an overall oil demand of over 100 million barrels a day at that point, but certainly, something that we keep a very close look at as we think about our research and development activities as well as building the strategy. A key element of all of what we've been doing in this area is, and you've heard us talk about it, is how we are making strategic investments today in order to upgrade those gasoline molecules into higher-value products like distillates and lubricants.

Evan Calio -- Morgan Stanley -- Managing Director, Research Division

Great. I appreciate the color. Second one on U.S. onshore bases, you know, Exxon is one of the fastest accelerators here of growth. You've gone from 16 to 25 rigs, added 4 in the Permian just since mid-year. I know your plan's here to add another 10 by 2018. I guess particularly as relates to the Permian, are you seeing any deterioration in equipment or completion crew quality that is being highlighted by some smaller operators, and are you able to fully mitigate or offset some of those pressures given your global sourcing advantage?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah. That's a good question because any time you come off a very low cycle like we've just been through, you have to be very mindful of the crew qualifications and the equipment capability. Remember, Evan, even in that low cycle, we maintained a fairly active rig program in the onshore U.S., and that is because we want to maintain that learning curve benefit, and we want to make sure that we're taking full advantage of the market at that point. So, therefore, as we ramp up, we've got a very strong fleet of service providers. As we add additional rigs, clearly the partnership that we've got with our service providers, they understand what the minimum standards are. Because what you want to avoid is all that rework associated with execution shortfalls and shortfalls in quality performance, but there's nothing material that I would point to at this stage, but it's something you've got to watch very carefully as you go into a ramp-up phase, especially in areas where there's a lot of activity.

Evan Calio -- Morgan Stanley -- Managing Director, Research Division

Great. Makes sense. Thank you.

Operator

We will now go to Phil Gresh from J.P. Morgan.

Phil Gresh -- J.P. Morgan -- Equity Research Analyst

Yeah, hi. Good morning, Jeff. Just first question, I just wanted to clarify the comment on the asset sale gains and earnings. You mentioned the quarter-over-quarter, but could you give us the absolute number? I know Downstream we didn't have the gains from last quarter, but what was the absolute Upstream gain?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

You're asking for in the quarter or quarter-on-quarter?

Phil Gresh -- J.P. Morgan -- Equity Research Analyst

In the quarter on an absolute basis.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

The absolute gain was almost $80 million in the quarter, and most of that was in the Upstream.

Phil Gresh -- J.P. Morgan -- Equity Research Analyst

Okay, got it. Thank you. Second question is on the CapEx that was asked about the forward-looking toward the longer term. You were talking about $25 billion plus or minus in a given year. I think when I asked about this last quarter, you did seem to suggest maybe it'd be more of a linear path, you know, lower and then kind of ramping in the out years. Is that still how you think about it, or would 2018 be more in that $25 billion plus or minus?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah, Phil, I think it's probably best to wait until we get to the next phase of communication around our forward investment plans. I mean, it's gonna be in the where we are in 2017 to around that ballpark, but as you know, we've picked up a number of very attractive new assets that we're gonna get after right away, and that needs to be integrated into our forward investment plans.

Phil Gresh -- J.P. Morgan -- Equity Research Analyst

Okay. Got it. Then you made a comment that you will not be doing buybacks to offset dilution. I think in the third quarter, I mean, it tends to be lumpy it appears. Maybe you can just comment on that and the decision not to do that.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah. So, there's two components. One is the purchase of shares to offset deletion for our benefits plans and programs. You know, that is lumpy. That happens usually, I believe, in the first quarter time frame. The second component of that is our buyback program. As we talked previously in capital allocation, you know, the way we think about it from our sources of funds, the first things that are being funded are our dividend and our investment program. If there's any cash left at that point, given that the corporation does not want a whole lot of cash reserves, it's at that point that we will look for what the next best thing is. It may be if we have some debt maturing, we'll pay that debt down, but on a quarterly basis, we'll make a decision on whether we go ahead and buy back some shares. I'll say, Phil, that decision is a function of a number of factors, one being the current financial position of the corporation. As I said, both our CapEx and dividend requirements as well as what we see in the near term in terms of the business outlook, but it's a decision that ultimately is made on a quarterly basis.

Phil Gresh -- J.P. Morgan -- Equity Research Analyst

Okay. I'll leave it there. Thanks.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Thank you.

Operator

We'll now go to Roger Read from Wells Fargo.

Roger Read -- Wells Fargo Securities -- Senior Energy Analyst

Yeah, thanks. Good morning.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Good morning, Roger.

Roger Read -- Wells Fargo Securities -- Senior Energy Analyst

If we could come back to the Permian, the comment about 10,000-foot average laterals now going to 12,500 or at 12,500 and then the idea of 15. Can you give us an idea of maybe what you've done pilot-wise to this point that gives you confidence that that's the right direction to go? Just because as you go longer laterals, more things can go wrong, and since you do have the acreage, maybe an idea of the performance you're seeing out of those longer wells relative to, say, 10,000 or less.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah, it's a good question and you're really honing in on a key element of our overall strategy. I'll start with it's probably becoming much clearer to the group what the value chain strategy that we put in place for the Permian. We built up a very large contiguous acreage position that really allowed us to leverage the strength of our technology capability. For us, I'll be real clear: it's not about just how we execute. It's all about how do we extend best-in-class performance. I mean, clearly what we're trying to do is leverage our full technological capability to go in and achieve the lowest unit cost, and then capture the highest value from the barrels through the full-value chain ultimately to the customer. Okay? So, what we have done, is we have recently drilled several wells in the Bakken on a three-mile laterals. The first one has been completed now. These are very long wells. We want to make sure that we get good inflow performance across the full lateral length. We drilled the first well in Delaware at 12,500 feet, and that well's just coming on right now, and we're getting ready to drill a three-mile lateral in the Permian as well. We got a very focused research effort on this from the reservoir all the way to the hardware, and we're really looking at how do we make a step change in the ultimate development here.

Roger Read -- Wells Fargo Securities -- Senior Energy Analyst

Okay, great. Thanks. Then, just as a follow-up back to the earlier question on CapEx, if we make the adjustment for the, let's just assume the Permian acreage was the big change Q2 to Q3, it implies that your overall CapEx was fairly stable Q2 to Q3, and then you have the Mozambique in front of you. Is there any other, other than the comments about kind of higher drilling in the Lower 48, anything else that we should think about that steps up as we go into year-end, first part of 2018?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah, let me just correct you on the increase in the third quarter. That was primarily driven by closing the acquisition for Jurong Aromatics. Okay?

Roger Read -- Wells Fargo Securities -- Senior Energy Analyst

Oh, I'm sorry. I was talking Upstream CapEx only.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Oh. Okay.

Roger Read -- Wells Fargo Securities -- Senior Energy Analyst

So, 2.8 went to roughly 3.2, and the math works out that that's the Permian. Obviously, you've got plenty of things moving around, but I was just tryin' to understand if that is the case, then the step up, even if we adjust for Mozambique, still has to be fairly significant in the latter part of this year. I was just wondering what else was going on as we kinda walk our way into '18 other than an increase in Lower 48 activity.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah. Well, probably the biggest piece is the increase in the Lower 48 drilling, predominantly in the unconventional. We also, just to remind you, we also have four major projects underway that are, you know a couple of them are getting close to a start-up stage. So, it's primarily project spending, it's the ramp-up in unconventional, and then our base 4 program in the Upstream.

Roger Read -- Wells Fargo Securities -- Senior Energy Analyst

Okay. Thank you.

Operator

We'll now go to Sam Margolin from Cowen & Company.

Sam Margolin -- Cowen & Co., LLC -- Managing Director, Energy Research

Hey, good morning.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Good morning, Sam.

Sam Margolin -- Cowen & Co., LLC -- Managing Director, Energy Research

I'd love to get your assessment of the L&G market right now, considering it ties back to a couple of the acquisitions you made over the past year plus, and you did mention that some of the capital ramp is going into those new assets. I mean, the market's been really quiet over the course of all of 2017. Not a lot of new FID activity or reports of buyers really looking to accelerate commitments. I wonder how much of that is due the wall of supply that's coming on between now and '18, and if you think that can pick up sort of as the second half of next year emerges, or if this quiet period might last a little bit longer and how that might affect some of your timing around some of those big global gas assets you have.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah. Sam, again, I'd start with our energy outlook where we've got gas growing from 2015 and 2014, about 1.5% per year. A pretty sizable component is our L&G business, and that's growing probably two and a half times over that timeframe. Now, just like any type of commodity, we're gonna have periods of oversupply and periods where there'll be insufficient supply, and I think everybody's well aware there's a number of projects that have come on that are ramping up. Others will be starting up, and that's likely to provide a period where we'll have oversupply to, say, the mid-2020s.

As we think about the very large, very diverse portfolio we have that potentially the L&G projects, we're moving all of them forward at the pace consistent with where the project is in its maturation timeline. The objective is to move all them into the final investment decision, but we recognize they're not all gonna go at that same pace. You know, the key here, the very important message here, is we gotta be on the far left side of the cost of supply curve. We have got to be the most cost-competitive out there in the market in order to attract that demand growth that I was talking about.

Sam Margolin -- Cowen & Co., LLC -- Managing Director, Energy Research

Okay, yeah. I guess, so, the follow-up, then, I guess, because this hasn't been apparent, by the way, the market has progressed over the past year or so. Do you think there'll be opportunities for buyers to, for you to, get commitments from buyers at the scale that you might need to FID some of these projects, even if the market at that time is oversupplied? Like, are you seeing from your customers a look out into that post-2022 timeframe when the market's more balanced and they can sign up commitments out in the future? Or do they need to see more near-term evidence of tightness before they move?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

I think it's a mix of both. I think the buyers are looking far out. Obviously, they need that supply. They need to make sure that they are well-positioned from their standpoint to competitively capture that supply. I would just remind everybody that we have underpinned out past L&G funding decisions with long-term firm contracts, and we all know that the market continues to evolve, adding more flexibility in commercial terms on shorter durations. So, while our objective remains to secure commercial certainty to underpin these large funding decisions, it's more likely that projects in the near future will be based on a hybrid of sales. Although that doesn't diminish our interest in locking in long-term firm contracts.

Sam Margolin -- Cowen & Co., LLC -- Managing Director, Energy Research

Alright. Thank you so much.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Thanks, Sam.

Operator

We'll now go to Paul Sankey from Wolfe Research.

Paul Sankey -- Wolfe Research LLC -- Managing Director and Senior Analyst

Hi Jeff. There's a little bit more Permian disclosure that's been referenced. When I look at the data that you've given here, you added $22,000 operated acres, more than $400 million oil-equivalent barrels. Would I be mistaken in assuming that you spent about $400 million in the quarter based on the statement that you paid about $1.00 an oil-equivalent barrel? Would I be even more mistaken if I said that that was about $18,000 an acre? Is that just too much inference?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Well, that's an implied cost, and the reason I say that, Paul, is because the five transactions we're talking about were both cash and trades. So, there were a number of non-cash trades that were in there as well.

Paul Sankey -- Wolfe Research LLC -- Managing Director and Senior Analyst

Okay. Alright, that's fine. Then, it's interesting that you're talking about these much longer laterals, the 10,000 feet, and then you're saying that you're going to be drilling a three-mile lateral in the Permian but you've actually just completed one in the Bakken, I think that's what I heard. Correct?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

That's right. We actually drilled, I think it's four in the Bakken, and we've completed the first one.

Paul Sankey -- Wolfe Research LLC -- Managing Director and Senior Analyst

Great, and then if I look at the slide, and this is obviously slide 15, the implication of the very impressive growth forecast that you have is that you have all the acreage you need, more or less, to achieve the very aggressive volume growth you're going for, insofar as you identify the acreage that's going to provide that. Again, is that too much inference, or is that a fair sort of...?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

No, Paul, that's a good clarification. The volume that we have on the selected teen is really based on existing acreage that we have. Now, as I said in my prepared comments, one of the things that we're doing in a lot of our transactions is they build on, they bolt on, to existing acreage that we have. So, directionally, I can share that one of the strategies is to continue to grow that contiguous acreage.

Paul Sankey -- Wolfe Research LLC -- Managing Director and Senior Analyst

Got it. Okay, that's helpful. Thanks a lot. Then, Jurong was reported in the press to be a $1.7 billion fail. I think that's public information. Is that about the number? I'm trying to obviously get to the clean, underlying CapEx.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah, Paul, unfortunately, we're bound by a confidentiality agreement on that with the sellers.

Paul Sankey -- Wolfe Research LLC -- Managing Director and Senior Analyst

Understood, Jeff. Then the last one for me is you did mention that you've been trending lower in corporate and other expenses, but there'll be a bounce in Q4. I just wondered what that was about. It's a bit of an arcane question for you, but thanks.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah. Well, as you know, corporate finance costs have a lot of variables in them, but I would say that probably the largest part of it, Paul, will be an absence of some of the favorable items that we're seeing in this quarter.

Paul Sankey -- Wolfe Research LLC -- Managing Director and Senior Analyst

Fair enough. Thank you.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Thank you, Paul

Operator

Our next question comes from Ryan Todd from Deutsche Bank.

Ryan Todd -- Deutsche Bank Securities, Inc. -- Equity Research Associate

Thanks, Jeff. Maybe just a couple quick ones. In the Permian disclosure you have there, you talk about the plan to increase from 20 Permian rigs to 30 by year-end '18. Is that the same -- is the assumed pace of activity growth the same that was implied in the 2017 Analyst Day earlier this year?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

I would tell you that it's picking up a bit. I'll just make sure I want to clarify for everybody that these are operated rigs. This does not include not-operated rigs that we participate in, but the volumes itself is our total net production. The rig counts, I mean, it's comparable to what we had originally planned when we detailed out the basis for the acquisition, and thus what we shared with you in the March Analyst.

Ryan Todd -- Deutsche Bank Securities, Inc. -- Equity Research Associate

When you look out over that multi-year period, how much does commodity price figure into that? You tend -- I know you're executing a long-term plan, which is based on value creation, but as you think about potential upside and downside risks to that plan going forward, how much does the commodity figure in versus as you think of things like efficiency gains or counts deflation or inflation?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah. Well, certainly it's a factor, but we're workin' on both sides of that equation. We're not only workin' on the realization being mindful as we do the economics, but we're also workin' on the overall capital invested in the operating costs, driving that cost basis down. You may recall in an earlier call, we provided a snapshot, I think it was in the Analyst meeting, a snapshot of the economic resiliency of the existing portfolio, and at $40 flat real, which is a reasonable lower-end here, we had over 5,500 wells in the Permian and the Bakken that generated at least a 10% rate of return. A large part of them, I'd say about a third of them, generated actually better than a 30% rate of return. So, very good economic resiliency, but don't think of that as being static because we continue to work on dropping that cost. You remember last quarter I was sharing with you all that while our average unit development cost is $7.00 per oil-equivalent barrel, we are trying to push that down further to as far down as $5.00 per barrel.

Ryan Todd -- Deutsche Bank Securities, Inc. -- Equity Research Associate

That's great. Thanks. Maybe just one on Brazil. I appreciate the disclosure you have in the slides on Brazil. Can you maybe talk a little bit about your thoughts on the acreage that you've acquired? How it would compare possibly to the upcoming pre-salt round, which I think is going on today, in Blocks which I think you're potentially involved in? Then, maybe what are your requirements from a drilling and seismic point of view over the next few years, and how it more broadly fits into your global expiration portfolio?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah. Well, as you probably picked up from my prepared comments, you know we're very excited about the acreage position that we have. In fact, the bid round that's going right now, I guess it's been announced now that ExxonMobil won the high bid on North Carcara as well. So this has really allowed us to get into a very prolific basin that we've been looking at for some time. You all are very much aware that this is all about value for us, and we've been very mindful of making sure that while it's got a very strong resource endowment, we needed to do it on the terms that it was competitive with our existing inventory, and we're very pleased with that.

Obviously, when you think about how we high-grade the portfolio, it's all about through our acquisitions and our exploration program, bringing in resources that go to the very top of the portfolio and then to our divestment program, monetizing the resources at the very bottom. Our full intent, as I said in my prepared comments, to get right after the Brazil acreage, we've got some really strong partners that we'll be working with. We've already got some seismic -- as I said in the prepared comments, that we have some good sense of what's out there. We're gonna get right out to in 2018 3D seismic, and then shortly thereafter drilling. So, very pleased with where we are, the potential that we've got in yet another high-quality deep-water resource that we'll bring our expertise to.

Ryan Todd -- Deutsche Bank Securities, Inc. -- Equity Research Associate

Perfect. Thank you.

Operator

Our next question comes from Alastair Syme from Citi.

Alastair Syme -- Citi -- Managing Director

Good morning, Jeff. It's topical that you mentioned the Brazil award that's just been announced. I'm gonna guess that Exxon shifted a lot of the deepwater focus in recent years from West Africa to South America. Do you think the focus on the other side of the Atlantic margin is geological based or regulatory or really a combination of both?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Well, I mean, we keep a very broad brief of where there is high-value potential in the various basins. Remember when you think about how we have structured our exploration program, it's primarily focusing in two areas: one being a focused exploration program on high-quality resources where we have existing operations that we can quickly leverage to get those discoveries on production in a very fast timeframe. The second area is new, big, high-value potential that's play opening. You know, in Brazil, very strong geology. The government has evolved the fiscal basis, and it's got good, competitive fiscal terms, so that's how we're focusing in on the exploration program.

Alastair Syme -- Citi -- Managing Director

My fellow, Jeff, on the offshore has been seeing a lot of deflation, and some of the recent deep-water rig contracts have been getting pretty low. Are we at the stage yet that ExxonMobil is getting concerned about the financial viability of the supply chain that you see? If so, what are you trying to do about it?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Well, I think you do address an issue that this issue has had to deal with over the cycles. When you get into a low period, as I referenced earlier, the service sector starts getting down to their cost structure, and we have got to continue to find those win-win solutions that allow the producer to achieve an attractive return and at the same time keep the service sector healthy. One of the areas that I think ExxonMobil contributes is we develop very long, effective relationships with our supplier sector, and they fully understand that the amount of activity we can provide is a function of the value they add to the investment decisions. You know, they have a tremendous amount of capability and innovative concepts that they have brought to collaborate with us in terms of providing new solutions for some of the more challenging resources. I think we have a mutual objective, here, and I think most of the service sectors understand that as well.

Alastair Syme -- Citi -- Managing Director

Thank you very much.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Thanks, Alastair.

Operator

Our next question comes from Paul Cheng from Barclays.

Paul Cheng -- Barclays Capital -- Equity Analyst

Hey, Jeff.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Good morning, Paul.

Paul Cheng -- Barclays Capital -- Equity Analyst

Good morning. Several really quick clarification. Early in your presentation when you're looking at the Permian expected growth, say, up to 5-600,000 barrels per day kind of production by year 2025, is that based on the rig program at 30 by the end of next year and then steady at that level? Or that that's based on a continuing incremental growth in rig program?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

It's really the latter, that we would see some further growth in the rig program.

Paul Cheng -- Barclays Capital -- Equity Analyst

At this point, it is too early for you to comment on what is the growth rate of the rig that you may have in mind?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

No, really it's an interesting question because remember these rigs are getting much, much more productive. You know, how we drill these wells are getting much more efficient. I would expect over this time frame that we would see much greater efficiency as we continue to progress this development. As we have historically. I mean, if you look at the rig counts right now in the Lower 48, while they're down more than 50%, that's not an equivalent reduction in overall activity because these rigs are much, much more productive today than they were back at the peak periods.

Paul Cheng -- Barclays Capital -- Equity Analyst

Sure. Second question. That in the press release and you also mentioned that Harvey impact is $160 million. Just want to clarify, does that represent only the cost associated for the repair, or this is also include the lost opportunity cost?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah, it includes two components. It includes the expenses as well as the lost volume. So, that $160 million as we had in our press release and as I talked about previously equates to about a $0.04 per share hit.

Paul Cheng -- Barclays Capital -- Equity Analyst

On Turbot, the mix, a well you're going to drill next year. Is that appraisal to the Turbot discovery, is that always going to test on the grid to Turbo area other structures?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah, so on the existing resource, it will be a delineation of the existing resource. Any time you drill, remember this is a large area with a very small well bore that's gone through it. These are generally stratigraphic traps. It's about making sure that we test these multiple traps that we've seen in these accumulations. So, it's going to have several objectives as we go forward, and then of course, in the general Turbot area, there are several other prospects that, given now we have now proven the play, we need to go ahead and integrate those learnings into our full rig schedule.

Paul Cheng -- Barclays Capital -- Equity Analyst

Okay. Final one. The 22,000 net acre, the five transactions that you did, you mentioned that is about $20,000, so that's roughly about 440. So should we assume that the increase from the second to third quarter in the U.S. CapEx is all related to this? Because, I mean, if you back out $440 million it actually means that the CapEx in U.S. actually slightly down sequentially.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Actually, that's not the case, Paul, because, as I responded to Paul Sankey earlier, that is a combination of both cash as well as trades that we made. There were some non-cash transactions there.

Paul Cheng -- Barclays Capital -- Equity Analyst

There's a net increase of $22,000, right? Or that the $22,000 is the final transaction but it's not a net increase.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

That's a net increase of $22,000 in the Permian.

Paul Cheng -- Barclays Capital -- Equity Analyst

So, if it is a net increase, even now if you have to trade, you still -- no, but that's fine. We can take it offline. Thank you.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah, don't think that the trade involves just Permian assets.

Paul Cheng -- Barclays Capital -- Equity Analyst

Yeah. I understand. Thank you.

Operator

We'll now move to Blake Fernandez from Scotia Howard Weil.

Blake Fernandez -- Scotia Howard Weil -- Senior Equity Research Analyst

Hey, Jeff. Good morning. It's late in the hour, so I'll just keep it to one question. I just wanted to shift gears a bit to European gas. Last quarter that came off pretty dramatically, and it looks like it's remained depressed. I didn't know if you could just help us kind of ways to think about modeling that going forward. I know seasonally you would typically have an uptick in the 4Q, but any thoughts on that potentially returning at some point into next year or so?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah, there really are two components on the European gas. Obviously, as you already pointed out, seasonal demand impacts, which would turn around in the fourth quarter, or start to turn around in the fourth quarter; and then the second, it was about, I'm thinking it was about a 90 million cubic feet a day impact associated with the regulatory cap on the Netherlands. As well, I think, Blake, there was some downtime in the U.K.

Blake Fernandez -- Scotia Howard Weil -- Senior Equity Research Analyst

Just so I'm clear on that 90 million a day, is there any outlook on that potentially changing into the future, or should we just view that as out of the volume mix going forward?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Well, you know, we are in, or NAM is in active discussion with the government. I can't really speculate on how that will play itself out over time.

Blake Fernandez -- Scotia Howard Weil -- Senior Equity Research Analyst

Understood. Thank you.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Okay.

Operator

We'll now go to Jason Gammel from Jefferies.

Jason Gammel -- Jefferies -- Wall Street Analyst

Thanks. I just wanted to come back to the point that you're making about enhancing Permian across the integrated value chain. Obviously, you've been building a big upstream position and already have the downstream position on the Gulf Coast. Can you talk about appetite for owning the midstream assets, and I guess put that in the context of the Turbot acquisition at Wink? What would you consider strategic that you would want to own with obviously your low cost to capital, and what are you willing to detract out?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah, Jason, thanks for highlighting that because that's really the key message that we wanted to convey as it relates to our Permian. It's just not a pure Permian play. It's the full value chain from resource all the way to molecules to the customers, whether it be refined products or chemical products. As you heard in my prepared comments, one of the things we continue to look at is where are the value leakage across that value chain, and do we add value in that? If we do, that's what we'll play into our strategy how we capture incremental assets across that value chain.

On the Permian, we got very strong Gulf Coast manufacturing facilities. We have a very strong Permian resource position. We pick up the flexibility in the logistic system through the pipeline transactions that we've made. We've now got this oil terminal that gives us control and value capture. You know, we will continue -- like we do in all of our assets, by the way. We will continue to look at how can you further strengthen that value chain proposition that we, our shareholders, are capturing the majority of the value there? Now, there may be some things along that value chain that we just don't add value to, and we're OK with someone else providing that missing piece in the value chain and getting value for it. I think you get a better line of sight in terms of what we're doing in terms of our value chain management.

Jason Gammel -- Jefferies -- Wall Street Analyst

Okay, thanks for that, Jeff. Just the second one if I could, please, now that Jurong transaction's been completed, can you give us some idea of how to think about the incremental profitability from the chemical business? I know we've got the PX volume and we can take that times margin, but can you talk about some of the synergistic benefits that you get from that transaction when you combine it with your existing Singapore assets?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah. I think probably the best guidance we've got from you from a quantification is what you just said in terms of additional aromatics that we're picking up from it. Remember, there's still about, it's about 65 thousand barrels a day of fuel coming from that facility as well. Of course, the value proposition for us was not only the added value we would get from what the market currently values the asset from because of the unique contributions we think we bring to it, but also the synergy it's got between the Jurong Aromatics site and our big Singapore manufacturing facilities. Probably the biggest part of that is logistics, leveraging the logistics capability of that site for the full integrated site, but we've not put numbers out there externally on that.

Jason Gammel -- Jefferies -- Wall Street Analyst

Okay, I guess I'll just make some guesses, then. Thanks, Jeff.

Operator

Biraj Borkhataria from RBC Capital Markets has our next question.

Biraj Borkhataria -- RBC Capital Markets -- Vice President Equity Research

Hi. Thanks for taking my question. I have two. First one is on Mozambique. Could you just talk through the steps from now until closing any significant things you need to close it by your end and if there's any risk to that slipping into 2018? The second one is just on the Carcara acquisition that was announced just now. In the press release from one of your peers, there were some contingent payments, and I was wondering if you could just detail whether these are just related to your price or anything else you can highlight. Thank you.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Okay. On the first one on Mozambique, it's fairly simple in that we need to get a number of approvals, and we're still waiting for those approvals. As to the possibility that it's spilling into 2018, there's always a possibility, but in our objective right now, Biraj, is to go ahead and conclude this this year. On Carcara, you know I'm not sure I know what you're really referring to. You know, I'm gonna have to punt on this one because I'm not sure what you're referring to.

Biraj Borkhataria -- RBC Capital Markets -- Vice President Equity Research

Just the press release from Statoil says they'll get $800 million from you guys, and then a contingent payment of $500 million. So, I was just wondering what that $500 million was contingent on.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah, OK. Biraj, we're bound under a confidentiality agreement. I can't really talk about the commercial terms.

Biraj Borkhataria -- RBC Capital Markets -- Vice President Equity Research

Okay. No worries. Thank you very much.

Operator

Theepan Jothilingam from Exane BNP has our next question.

Theepan Jothilingam -- Exane BNP -- Managing Director

Yeah, good morning, Jeff. I have just a couple of questions. Firstly, you have been very active in the asset market in Mozambique, Brazil. I was just wondering how you see some of the essential offset by being a bit more reactive on the disposal site, particularly given some firming of prices there. That's my first question, actually. Thank you.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah, Theepan, a key element of our asset management program as I said earlier is to go ahead and monetize those assets on the bottom of the portfolio where importantly where others see value that's incremental above what we expect that we can capture from the continued operation. We are always considering whether we can go ahead and complete that type of a transaction, so if you look at, for instance, the last five years, our total proceeds from asset sales were over $20 billion. So, as I've said before, anywhere from $2 to $4 billion a year, we've historically went ahead and sold, but it is very focused on making sure that we're getting the most value from each one of our assets and if we get the right value proposition, we'll go ahead and pursue it. It is a key element of our ongoing asset management to the various business lines.

Theepan Jothilingam -- Exane BNP -- Managing Director

Right. The second question I had was can I come back to the recent asset transactions. You talked very much about having control in the Permian. I'm interested in terms of the moves both in Brazil and Mozambique to a certain degree where you've got less control. Is that a trend that we can expect more of sort of outside U.S. on shore that you're prepared to take more non-operated positions?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah, well, I would say fundamentally, if we can operate, we feel like we've got the greatest value proposition to bring, but that doesn't make that an exclusive criteria. If we think that there's a good value proposition in the co-venture, the structure of the co-venture is very much willing to go ahead and allow us to contribute to the maximum extent, that's what we're gonna go ahead and set up. The key here is the value capture proposition, and the operatorship and the qualifications of those operators and our ability to make sure that we can influence the outcomes is all incorporated in that value proposition.

Theepan Jothilingam -- Exane BNP -- Managing Director

Okay. Alright. Thanks, Jeff.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Thanks, Theepan.

Operator

We'll go to Brendan Warn from BMO Capital Markets

Brendan Warn -- BMO Capital Markets -- Managing Director, Equity Research

Yeah, thanks, Jeff. I'll keep this one question considering the timing. Just Baytown. You've obviously reiterated you haven't had too much in terms of production impacts because of Harvey, but can you just give us an update on the steam cracker and the development project there in terms of just impacts, delays, and any carry over to 2018, just if there's gonna be a flow or ramp up 220 impacts.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah. So, just to recap, the whole project included a Houston cracker at Baytown for 1.5 million tons per atom, and then concurrently, we've invested in Mont Belvieu for the derivative units, two 650,000-ton polyethylene, metallocene polyethylene trains. On the latter part, the first train has started up, and the second train is starting up now. So, we have started generating a revenue stream for that project. On the steam cracker, the site was temporarily shut down due to the hurricane, but the construction activities resumed once all of our assessments were completed. Right now, the plan is that we would get to mechanical completion early in the part of next year, and then production by the middle of the year.

Brendan Warn -- BMO Capital Markets -- Managing Director, Equity Research

Okay. Appreciate the update.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

You bet.

Operator

Anish Kapadia from TPH has our next question.

Anish Kapadia -- Tudor, Pickering, Holt & Co. -- Managing Director of Research

Hi Jeff. This question was on Golden Pass. I was just wondering how did that fit into your U.S. integration strategy, and has the decision by Qatar to increase its LNG capacity significantly shifted your partner's focus just as your own focus in expanding production in Qatar rather than going ahead with Golden Pass?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah, Anish, it's a good question. As I said earlier, we've got a number of opportunities in which we can invest in order to capture that LNG demand growth, and we're progressing them all concurrently. Now, Golden Pass is another key aspect of the value chain within North America gas. We're the largest producer of North American gas. So, we continue to progress the opportunity there. As you know, after a fairly extensive period of time earlier this year, we received the Department of Energy's authorization for export of LNG to non-FTA countries, which was an important milestone. That happened in April of this year. Now we're focused on bringing together the remaining elements of the project, that being the finalizing the technical definition as well as the commercial details for a final investment decision. It is one of many opportunities that we're progressing.

Anish Kapadia -- Tudor, Pickering, Holt & Co. -- Managing Director of Research

Okay, thank you. Then, I have another question. Just wanted to back to the CapEx once again, sorry to get back to it. I just wanted to clarify. So, the way I kind of understand the CapEx for this year, it seems like an organic basis if we strip out the acquisitions it's basically $7 billion going up to $25 billion next year on an organic basis. I just want to try and bridge what that gap is. Where does the incremental $8 billion come from? The acquisition that was announced today from Statoil for approximately $1.4 billion, is that included also in the 2018 spending? Thank you.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah, well, a couple points. One is that, remember when we set up a budget, there is a fair bit of flexibility, and what we're trying to do is live within our means. We're very focused on being selective in our investment program, maintaining our capital discipline, and there may be some things that we'll decide to slow down and replace it with an opportunity that comes in. So, it's not necessarily that it's 100% fixed and all of the specific budget allocations are gonna be executed with whatever we came up with in our planning process.

I'll give you a good example, and I think I've said it before. Jurong Aromatics was not in our, specifically was not in our budget for 2017, and we still believe that the budget guidance that we issued almost a year ago is still staying appropriate for sharing with you all. So, I mean, there's some things that will move in and out, and as a result, there is a level of dynamic changeout that's going on in that forward projection. If you go back to the 2018 and 2020 forward look, we shared with you in the analyst presentation the key components that were driving those capital expenditures over that timeframe. That's probably the best guidance I've got for you at this point.

Anish Kapadia -- Tudor, Pickering, Holt & Co. -- Managing Director of Research

Okay. Thank you.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

You're welcome.

Operator

We'll now go to Neil Mehta from Goldman Sachs.

Neil Mehta -- Goldman Sachs -- Energy & Utilities Equity Research Analyst

Good morning, Jeff.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Good morning, Neil.

Neil Mehta -- Goldman Sachs -- Energy & Utilities Equity Research Analyst

Jeff, we've talked a lot about the asset deals you've done here, whether it's InterOil, Bass, the 22,000 acres, Mozambique, but can you talk a little bit about the corporate M&A market. Now historically, you guys have said that the U.S. EMP sector, for example, was not appropriately valued, or you weren't able to identify attractive opportunities at the right price. As that sector has underperformed or other corporate deals that are out there, has that bit as started to close from your perspective?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah, I would respond this way, that we're not limiting any of our potential opportunity base. So we'll keep open to where there may be attractive opportunities for us to pursue. Remember, there's two things you're trying to pursue here. One is, you're trying to, in anything you pick up, be it an asset acquisition or a corporate acquisition, you want to get material synergy benefits or be able to add value above what the market values that asset at, or both. Ideally, both. So, we keep a very full look. We keep the aperture very wide on where there may be opportunities, but as you've seen here in the recent past, primarily where we see the greatest value is on asset acquisitions. Now, some of those assets were held by a single company, and that's all they had so it ended up being one and the same. Right now, what's most attractive to us has been these asset acquisitions.

Neil Mehta -- Goldman Sachs -- Energy & Utilities Equity Research Analyst

That's great. The follow up is just on your Canadian Oil Sands business. You know, the ramp at Kearl has been taking a little bit longer than anticipated a few years ago. Where do you stand there, and just the latest in potential sanctioning of Aspen, recognizing that Imperial's also in a position to come in on that.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah, well, clearly I'll just say up front, the Imperial Organization has really worked Kearl very hard. They're making some really great progress. I give them a lot of credit for the progress that they're making. This is a long life asset, and we see the long-term value in it. It has not ramped up as we would have expected, but we have made, as I said, very good progress in reducing the cost structure and very focused on improving the reliability. I mean, we're bringing the full capability of the organization to bear on this. Remember, this is just not the asset. We're thinking about the full value chain benefits as well. I have the utmost confidence that the organization is gonna continue to grow value on Kearl, but I think job number 1 right now is to get that liability up. So, we've got some work to be done there, and we're not shy about it, but we're very optimistic about where we're heading.

You know, around future investments in the Oil Sands, I think I'd characterize it this way, that -- and Neil, you've heard me say this before. If we are really building this business to be durable in a low-price environment, we've gotta get the technology at the point that it's gonna get the cost of supply down, that regardless of where we are in the price cycle, that we're generating a very attractive return. I will tell you, we've made great progress in terms of in-situ technology and capability, and we're very encouraged by that progress, particularly in SA-SAGD, but I would say we still got a little bit further to go. Not only are we at a point where we're able to substantially increase the overall return, but also reduce the cost as well as reduce the environmental footprint. That's important for us as we go forward. We got a very large acreage position. It's important that we get this thing right, and the organization's very focused on it.

Neil Mehta -- Goldman Sachs -- Energy & Utilities Equity Research Analyst

Thanks, Jeff.

Operator

We'll go to Pavel Molchanov from Raymond James.

Pavel Molchanov -- Raymond James & Associates -- Sr. VP and Equity Research Analyst

Yeah, thanks for taking the question, guys. When you're guiding to CapEx for 2018, and you talk about the $25 billion number, what's the breakdown of that between organic and acquisitions? In other words, are you baking in credit for cash outlays on acquisition activity for next year?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yes. Good morning Pavel. As we talked earlier, probably the best guidance I can give you right now would be going back and looking at how we have segmented our investment plans between 2018 to 2020 in the Analysts meeting. As I said earlier, if there is a transaction that we believe is very close to reaching an agreement, we will go ahead and include it in our forward-looking investment plans, like Mozambique was for this year. Other than that, we keep some flexibility in our budget. Remember, what we're tryin' to do here is it's all about the value proposition. We're gonna live within our means, we're gonna manage our CapEx appropriately, we're gonna keep our financial flexibility, but we are not gonna forego opportunities. We've got significant financial capability to go ahead and pursue opportunities when they come up, and I think that is a unique attribute of this corporation, is that when particularly in a down cycle, we can go ahead and respond fairly quickly when those opportunities come up.

Let me say, a lot of them come up, and they come up very quickly. You have got to be able to respond, and we've got the financial capability and expertise to go ahead and create value in a lot of these things.

Pavel Molchanov -- Raymond James & Associates -- Sr. VP and Equity Research Analyst

Great. That's it for me. Thanks.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Thanks, Pavel.

Operator

Our next question comes from Rob West from Redburn.

Rob West -- Redburn -- Partner, Oil & Energy

Hi. Thanks for having me on the call. In Brazil, you talked about competitive fiscal terms. All I wanted to ask you is, are those fiscal terms competitive with something like the Permian? Really, what's behind the question is as you look at new resource opportunities now around the world, be it Mozambique or Brazil or other ones, how much do the fiscal terms that have to compete with the fiscal terms in the Permian make you want to invest?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah, Rob, think about it in a couple ways. One is that I think most resource owners understand that they are competing globally for investment dollars. A key aspect of that is that not only the quality of the resource endowment, but also how competitive the fiscal terms are. Are they globally competitive? Are they transparent, and are they stable and predictable? I mean, fundamentally, that's what's going to set for a very attractive investment climate. Where you have seen a significant investment is generally tied to how those fiscal terms have supported an international investment program.

Now, for us, Rob, it is not a kind of either/or, that we gotta do the Permian or we gotta do something else. As I said a moment ago, we've got significant financial flexibility. For us, it is the resource quality, the fiscal terms, and our ability to go ahead and get to market from a value chain perspective and capture value. So, it's always that value proposition. So, we are making the trade-offs on the full value proposition to make sure that we are meeting our fundamental mission here, and that is growing shareholder value with creative investments.

Now, our portfolio is very geographically diverse, and there is some political aspects that we've got to tie into this each of these investment decisions. I think that's an attribute of the corporation that, once again, is very unique.

Rob West -- Redburn -- Partner, Oil & Energy

Okay, so just the first part of that question was on whether the fiscal terms in Brazil are competitive with fiscal terms in Permian. I'm not sure if you missed that one or if you can't comment on it. I just wanted to go back.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

No, I really don't have anything to share on comparing and contrasting specific asset fiscal terms.

Rob West -- Redburn -- Partner, Oil & Energy

Let me ask another one, then. One point you've made before that I think's been well made is that your scale gives you a lot of long-termism when it comes to procurement. I was wondering if in 3Q '17, was that the case in the area of pressure pumping, where it's pretty well known there's been some bottlenecks that have constraining completion activity. I'm wondering if it's in your scale and long-term procurement processes in Permian, did it help you avoid any of that bottleneck in a way you can share with us?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Let me respond to you in kind of a broader perspective, and it's very similar to what I said earlier Rob, where developing these long-term supplier relationships, it's really critical to make sure that we're all on the same page in terms of the quality standards, the operating standards that we adhere to. When we see cost pressures, we're very quick to react to find, OK, how are we building in the value proposition in our go-forward plans, and how do we offset those potential cost increases with more unique alternatives? It may be something as we've seen very significant in the Permian, and that's technology application. So, there's been some, in 2017 by example, there has been some inflationary pressures, largely in the unconventional business, but we have been able to offset that with these cost reductions that we're seeing in our drawing program, by way of example.

Rob West -- Redburn -- Partner, Oil & Energy

Okay. The final one I want to talk to is on the San Patricio cracker that, I think, follows Mont Belvieu. Can you just quickly give a sense of timing on that and share anything about that as something you're gonna really accelerate when Mont Belvieu finishes, or is it real longer term?

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah, so this is independent of where the Baytown cracker is. This is, again, a part of the value chain. For the broader group on the phone, this is a proposed, jointly owned petrochemical facility that would be a 1.8 million-ton grana methylene cracker, and then derivative units, a monoethylene glycol plant, and a polyethylene plant. We have, as you pointed out, we've selected a site in San Patricio County. Right now, we're beginning, we've been working with our partner for front-end engineering and design work. So, once we get to the point where we think we've got a good laid-out plan, we've moved in the permitting phase, once we've got all the ducks in a row, then we'll make a decision on whether we move forward with funding. It is very well positioned on the Gulf Coast to take full advantage of the feedstock that primarily would be coming in from the Permian and the Eagle Ford.

Rob West -- Redburn -- Partner, Oil & Energy

Thanks for taking my question. That's great.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Okay, Rob. Thank you.

Operator

We'll now go to John Herrlin from Société Générale.

John Herrlin -- Société Générale -- Equity Analyst

Yeah, hi. Just two quick ones. Regarding Guyana and Phases 2 and 3, Jeff, will this be a lot like Angola where every two years we'll roll out another FPSO system? I mean, I know it's still early days. I'm just curious.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Yeah, no, John. Good morning. It's very similar. If you think about my comments, you know you really want to get into that manufacturing mode very quickly. If you've got the resource, obviously we're gonna continue our exploration program. Hopefully, continue to grow the resource. You want to get into that manufacturing process because that will help reduce your learning curve and reduce your overall costs. So, you know, I keep on thinking about it like Angola program that we did on Block 15.

John Herrlin -- Société Générale -- Equity Analyst

Okay, great. One question on Brazil. Since you're getting a little bit further away from the initial discoveries by Petrobras and all that, are you assuming that the pay zones are gonna be carbonates or plastics? That's it for me.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

You know this is early days, and like I said, we do have some of our own seismic that we're analyzing, and it's really gonna be different wherever we are with the acres that we picked up. In the outer Campos Basin, it's primarily carbonate pre-salt.

John Herrlin -- Société Générale -- Equity Analyst

Okay, well you've got a lot of experience with that. I was just curious. You know, Petrobras can certainly use the help. Thanks.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Alright, thank you, John.

Operator

If there are no further questions, I'll turn it back over to you, Mr. Woodbury for any additional or closing remarks.

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Well, a lot of good questions this morning. I really do very much appreciate your time and your thought that you put behind those questions. Of course, we look forward to our communications, our ongoing communications, and we do appreciate your interest in ExxonMobil. So, thank you.

Duration: 98 minutes

Call participants:

Jeffrey J. Woodbury -- Vice President, Investor Relations and Secretary

Doug Leggate -- Bank of America -- Analyst

Doug Terreson -- Evercore ISI -- Senior Managing Director and Head of Energy Research

Evan Calio -- Morgan Stanley -- Managing Director, Research Division

Phil Gresh -- J.P. Morgan -- Equity Research Analyst

Roger Read -- Wells Fargo Securities -- Senior Energy Analyst

Sam Margolin -- Cowen & Co., LLC -- Managing Director, Energy Research

Paul Sankey -- Wolfe Research LLC -- Managing Director and Senior Analyst

Ryan Todd -- Deutsche Bank Securities, Inc. -- Equity Research Associate

Alastair Syme -- Citi -- Managing Director

Paul Cheng -- Barclays Capital -- Equity Analyst

Blake Fernandez -- Scotia Howard Weil -- Senior Equity Research Analyst

Jason Gammel -- Jefferies -- Wall Street Analyst

Biraj Borkhataria -- RBC Capital Markets -- Vice President Equity Research

Theepan Jothilingam -- Exane BNP -- Managing Director

Brendan Warn -- BMO Capital Markets -- Managing Director, Equity Research

Anish Kapadia -- Tudor, Pickering, Holt & Co. -- Managing Director of Research

Neil Mehta -- Goldman Sachs -- Energy & Utilities Equity Research Analyst

Pavel Molchanov -- Raymond James & Associates -- Sr. VP and Equity Research Analyst

Rob West -- Redburn -- Partner, Oil & Energy

John Herrlin -- Société Générale -- Equity Analyst

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