MARCH 9, 2011, 11:59 A.M. ET.

UPDATE: Exxon Sees 2011 Capital Expenditures Up 6% To $34 Bln

By Russell Gold and Isabel Ordonez

NEW YORK (Dow Jones)--Exxon Mobil Corp. (XOM) said Wednesday it plans to boost its capital spending budget this year by more than 6% to $34 billion and to increase production between 3% and 4%.

In its annual presentation to analysts, the oil company said its production is expected to increase by 4% to 5% on average between 2009 and 2014. Those estimates include volume additions from U.S. natural-gas producer XTO Energy, which it acquired last year. Excluding XTO production, Exxon Mobil expects its production to grow between 2% and 3% per year from 2009 to 2013. The estimate was unchanged from the range the company had provided in the past.

"As result of high-quality projects and the successful integration of XTO volumes growth is forecast to remain strong," ExxonMobil Chief Executive Rex Tillerson told analysts.

ExxonMobil, the largest U.S. oil company by market value, also confirmed it expects its annual capital expenditures to range from $33 billion to $37 billion through 2015, up from the long-term range of $25 billion to $30 billion announced last year. "These estimates represent our best view as we look for the years ahead," Tillerson said.

Exxon's move follows Chevron Corp.'s (CVX) 20% increase of its 2011 capital budget to $26 billion and ConocoPhillips's (COP) 23% increase to $13.5 billion, and constitutes yet another sign that Big Oil companies are shedding some of the caution that led to a moderation in capital spending after the financial crisis.

The oil companies' surge of optimism comes amid a steady rebound in oil prices, which came swiftly after the financial crisis. Oil is currently trading at above $100 a barrel.

Irving, Texas-based ExxonMobil said it expects to add production of about 1.4 million barrels of oil equivalent per day by 2016, with 80% of those volumes expected to be oil. Exxon Mobil expects large projects in Canada, Iraq, Kazakhstan, Russia and the U.S. to drive its growth.

The company said it plans to drill in the second quarter a new exploratory well in the Black Sea, where its partner Brazilian state-run Petroleo Brasileiro SA (PBR, PETR4.BR), or Petrobras, recently found oil but in not in commercial quantities.

Last year ExxonMobil, Petrobras and Turkish Petroleum Corp. agreed to jointly explore deep-water Block 3922 in the Black Sea, including the Sinop prospect.

ExxonMobil said it plans to drill this year in the Gulf of Mexico, where companies are waiting for the federal government to issue new permits to drill exploratory deep-water wells.

The company also said it increased production last year in unconventional shale areas such as the Haynesville formation in northwest Louisiana and East Texas and in the Fayetteville Shale in Arkansas. It said U.S. output is expected to double by 2020, driven mainly by development of shale areas.

The company said it continued to lease and make minor acquisitions in multiple unconventional shale regions onshore the U.S. Exxon said it currently holds 410,000 acres in the Bakken Shale in North Dakota and 120,000 acres in the Eagle Ford shale in Texas. Exxon is building its land position in other oil-rich areas, the company said.

The oil giant is also expanding its foothold in oil and gas exploration in unconventional areas outside the U.S., including Colombia, Argentina, Germany, Romania, Poland, China and Indonesia.

ExxonMobil Senior Vice President Andy Swiger told analysts that the company "fully expects" that its unconventional assets will provide material production growth and attractive returns for shareholders, similar to those offered by the company's deep-water and LNG assets.

ExxonMobil shares were 0.9% lower at $83.86 in recent trading.

http://online.wsj.com/article/BT-CO-201 ... 08844.html