Exxon's 2030 Targets Call for $35 Billion More in Cash Flow. Here's the Milestone That Tells You It's on Track By 2028.

ExxonMobil (NYSE: XOM) has presented Wall Street with a plan to increase earnings by $25 billion and cash flow by $35 billion by 2030. That goal is still a few years away, however, so it is important to keep an eye on the company's progress. If you own or are watching Exxon, one of the most important pieces of the 2030 puzzle will be the company's Permian business. Here's why onshore U.S. drilling is so important for Exxon right now.

Exxon leans into U.S. oil and natural gas

In late 2023, Exxon announced the $64.5 billion acquisition of Pioneer Natural Resources, a U.S. onshore driller with heavy exposure to the Permian Basin. At the time, the company stated that the deal "transforms ExxonMobil's upstream portfolio, more than doubling the company's Permian footprint." Management highlighted both the benefit of enhanced scale and the importance of technology. The deal closed in early 2024.

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ExxonMobil is one of the world's largest energy companies, with operations worldwide. No one region tells the company's whole story. But the Pioneer acquisition turned the Permian Basin into a key growth area. And it is one that investors should watch very closely as the company looks to achieve its 2030 goals.

One notable part of the plan is to grow Permian production to 2.5 MMboe/d. That would be a roughly 45% increase from year-end 2025. If it hits that mark, this one region would account for 45% of Exxon's total output, by some estimates. That's a huge amount of exposure to just one business. Luckily, the United States is both politically and economically stable, which reduces some of the risks that often accompany large energy investments.

That said, just producing more oil isn't enough for the company to meet its earnings and cash flow goals. Which is why the second key piece to watch is Permian Basin costs. Roughly 60% of the additional earnings and cash flow the company expects come from a mixture of increased production and reduced expenses. Exxon's ability to bring its per-barrel cost in the Permian Basin down to around $30 is something investors will want to keep an eye on.

Exxon's progress will show up year by year

These are fairly big goals, so investors shouldn't expect Exxon to simply announce it has reached its target one random day. Increasing production requires drilling more wells, while lower costs require drilling those oil and natural gas wells more efficiently. Incremental gains are what investors should be looking for.

There's nothing magical about 2028, other than the fact that it is kind of a middle point in the plan. What you really want to see is Exxon making progress toward its goal every year when it releases its annual report. But, at the end of 2028, you kind of want to read that the company is at least halfway there, if not a little more. Your reference point is 2025, when the company's Permian production stood at 1.6 million oil-equivalent barrels per day. On the cost front, you'll simply want to look for continual progress toward the cost-per-barrel goal.

Exxon's Permian exposure is not the only piece of the puzzle

All of that said, Exxon's business is larger than just the Permian Basin. You'll also want to monitor progress in target regions like Guyana, which the company also believes has structural advantages. And don't forget that the energy giant still needs to operate its businesses beyond a small number of target regions if it wants to hit its 2030 goals. So you really need to take a holistic view as you monitor the company's progress, while still paying extra attention to the Permian.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.