updated 3/5/2009 2:55:15 PM ET 2009-03-05T19:55:15

Exxon Mobil Corp. said Thursday it plans to increase spending on capital and exploration projects by 11 percent in 2009 and could invest as much as $150 billion over the next five years, even as many smaller rivals scale back operations.

The world's largest publicly traded oil company also said it could fuel growth another way — by snapping up competitors or partnering with some of the world's nationalized, state-run oil companies.

Exxon Mobil chairman and chief executive Rex Tillerson said the company, buoyed by record income in recent years, is well situated to execute those types of deals. Exxon was sitting on $31 billion in cash at the end of 2008, and analysts have speculated it's only a matter of time before the industry behemoth goes shopping.

"We've got the capacity to do any number of things we think will deliver good, long-term value, and we look at all of those all the time," Tillerson said during a presentation to Wall Street analysts in New York.

Tillerson said Exxon Mobil's capital spending this year is expected to reach $29 billion, up from the $26.1 billion it spent in 2008. Those levels are likely to remain in the $25 billion to $30 billion range through 2013, though Tillerson noted the uncertainty in today's markets.

Exxon last year released the same five-year spending plan for the company.

A deepening global recession and falling energy demand have forced many oil and gas producers to slash spending. Not so for Irving, Texas-based Exxon, which last month reported a profit of $45.2 billion for 2008, breaking its own record for a U.S. company.

"Exxon Mobil's business is strong, and so is our commitment to investing through the business cycle," Tillerson said. "Our capital spending plans are largely unaffected by the recent reduction in commodity prices. Our projects have always been evaluated using a range of prices to ensure robust returns across the business cycle."

Exxon said it expects nine new oil and gas projects to begin production in 2009 and, at their peak, add the equivalent of 485,000 barrels of oil a day to production. It also plans to drill a number of key exploration wells this year in places such as Brazil, north Africa, southeast Asia and Australia.

Despite its financial might, Exxon Mobil has reported declining production in the past couple of years — a troubling pattern for a company that generates more than two-thirds of its earnings from oil and gas production. Its global output fell 6 percent in 2008.

It has become increasingly difficult for Western oil companies to find new sources of fossil fuels. Even though most people recognize the names of the giant multinationals, they control less than 10 percent of the world's oil reserves. Most proven reserves — about 80 percent — are held by national, state-run companies like those in Venezuela and Saudi Arabia.

The sharp decline in energy prices, however, has severely hampered finances at many national companies, prompting speculation they may not be able to fund oil and gas projects that drive their economies.

Analysts say that creates opportunities for Exxon and other oil majors to forge new partnerships and gain critical access to potentially large reserves in places like Brazil, Russia and Libya.

"In a world where there's a credit squeeze, the idea of strategically aligning yourself with someone who has tremendous access to capital makes a lot of sense," said Amy Jaffe, an energy expert at Rice University's James A. Baker III Institute for Public Policy.

Tillerson used Exxon's alliance with Qatar's state-run oil entity as an example of one such success.

"We're always looking for other large resource owners and national oil companies that might be situated where we could bring a lot of value," he said. "That does not preclude looking at the private sector — at (other international oil companies) — for opportunities as well. As I've said before, it's all about value."

Exxon, like its rivals, benefited from the historic run up in crude prices during the first half of 2008. But all that changed in the second half of the year, as prices plunged from their high near $150 a barrel in July. Reflecting the 60 percent price drop in the fourth quarter alone, Exxon's fourth-quarter earnings fell 33 percent from a year earlier.

Results for the first quarter also are forecast to be well below earnings for the first three months of last year, again reflecting the sharp contrast in oil prices.

The average earnings estimate among analysts surveyed by Thomson Reuters is $1.09 a share, well off the $2.03 a share Exxon Mobil posted in the first quarter of 2008.

Last month, Exxon Mobil said it added 1.5 billion barrels of oil equivalent to its proved reserves in 2008, extending a positive trend of replacing more barrels than it produced. The added reserves totaled 103 percent of its 2008 output.

Reserve replacements represent the ratio of reserves found over production for a given period. Analysts typically say a company's reserves replacement should average more than 100 percent over a three- to five-year period to indicate growth.

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