Is Exxon Giving Up on Oil?

Look, I think we can all agree that the oil industry has been good to Exxon Mobil (NYSE: XOM).

But there are some downsides to the business, too. 

For one thing, commodity prices are cyclical. So while Exxon rides high when oil and gas prices are up, it labors when they’re down. 

Politics play a part, too. The OPEC+ cartel can still marshall enough influence to manipulate oil prices at will. And the same is true of rogue actors like Saudi Arabia, Russia, and Iran.

Throw in the frequent eruptions of chaos and violence in the Middle East and the situation is even more precarious.

Beyond that, the green energy revolution continues to make progress. The rate of that progress may be sluggish at times, but it’s still inevitable. 

Electric cars are going mainstream, helped by government policy, improved infrastructure (i.e., more charging stations), more retail options, sleeker designs, lower prices, and youthful determination to finally address climate change.

The trend away from gas-powered vehicles is already flourishing in Europe and Asia. And while adaptation in America has been less consistent, it’s still on course.

EV sales in the first three months of 2024 rose 2.6% year over year, after accelerating 15.2% in the final three months of 2023. 

But again, the global market is moving much faster, as worldwide electric car sales rose 25% in the first quarter of 2024. 

As a result, the market share of electric cars could reach up to 45% in China, 25% in Europe, and over 11% in the U.S. this year. 

It’s clear then that major fossil fuel companies like Exxon must prepare now — before they get left behind. 

And that’s precisely what they’re doing.

Exxon CEO Darren Woods recently said that his company’s Low Carbon Solutions business could generate hundreds of billions of dollars in revenue and even outperform its traditional oil and gas operations as soon as a decade from now.

This business includes things like carbon capture, hydrogen, and biofuels — a combined market that Exxon projects to reach $6.5 trillion by 2050. That would be equivalent to the traditional oil and gas business.

But that’s not all. 

In a somewhat shocking move, Exxon aims to become a leading producer of lithium — the key component of EV batteries.

To that end, Exxon acquired the rights to 120,000 gross acres of the Smackover formation in southern Arkansas in 2023. 

Smackover is considered one of the most prolific lithium resources of its kind in North America. And Exxon’s work to begin lithium production in 2027 is already underway. 

However, it will face some stiff competition. 

That is, another much smaller company is already active in the Smackover basin and it’s deployed a cutting-edge method of extraction that’s far more efficient than any seen before. 

It’s so advanced it takes just six hours to produce battery-grade lithium, shattering the traditional timeline of 12 months or more.

Better still, the technique avoids environmentally damaging practices like strip mining and the use of chemical-laden evaporative ponds.

That firm will soon begin producing 30,000 tons of lithium annually, with an expected project life of more than two decades.

Such production capacity would instantly elevate it to the ranks of the world’s largest lithium mining operations, vaulting it ahead of Exxon.

It’s even backed by the billionaire Koch brothers, who made their fortune in the oil industry. 

With production expected to begin in a matter of months, it’s only a matter of time before this upstart lands on every energy investor’s radar. But you can get ahead of the curve by checking out the full story here.

Fight on,

Jason Simpkins

Simpkins is the founder and editor of Secret Stock Files, an investment service that focuses on companies with assets — tangible resources and products that can hold and appreciate in value. He covers mining companies, energy companies, defense contractors, dividend payers, commodities, staples, legacies and more…

In 2023 he joined The Wealth Advisory team as a defense market analyst where he reviews and recommends new military and government opportunities that come across his radar, especially those that spin-off healthy, growing income streams. For more on Jason, check out his editor’s page.

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