A year ago, Exxon Mobil confronted its toughest challenge in its 140-year history.

The nation’s largest oil company suffered four consecutive quarters of losses in its exploration and drilling business, three-straight quarters of losses in refining, and company leadership faced a threat from climate-minded activist investors.

On Tuesday, Exxon celebrated its best year since 2014, saying it made $23 billion last year as oil demand and prices recovered swiftly from the pandemic-driven crash. Its new board — which includes three activist investor directors — is setting the company on a path toward net-zero carbon emissions from operations by 2050.

“Our effective pandemic response, focused investments during the down-cycle, and structural cost savings positioned us to realize the full benefits of the market recovery in 2021,” CEO Darren Woods said. “We’ve made great progress in 2021 and our forward plans position us to lead in cash flow and earnings growth, operating performance, and the energy transition.”

Exxon’s blockbuster earnings in 2021 came at great cost to the Texas oil giant, which slashed $5 billion from its business since 2019 and laid off 15 percent of its 72,000 workers around the world to weather the pandemic.

Woods on Tuesday said that instead of mass layoffs, the company’s future performance will be driven by operational efficiencies and growing oil demand.

The world’s thirst for crude products like gasoline and jet fuel re-emerged last year with the roll-out of coronavirus vaccines, allowing business and travel restrictions to be eased. The price of West Texas Intermediate, the U.S. crude benchmark — less than $50 a barrel a year ago — is racing toward $90. It settled 5 cents higher Tuesday in New York at $88.20.

Still, analysts don’t expect Exxon to go on a hiring spree. Rather, they say, it will maintain fiscal discipline.

Exxon turned around its business by cutting $1.9 billion from operations and holding capital spending on new projects to $16.6 billion last year, less than half the pre-pandemic spending level of $33 billion.

Instead of drilling new wells, Exxon repaid $20 billion in debt and returned $15 billion to shareholders through dividends. The company plans to buy back up to $10 billion of stock over the next year to two, boosting the value of outstanding shares.

This year, however, Exxon said it plans to boost spending on new projects by as much as 44 percent to $24 billion, still well below pre-pandemic levels. It also is considering “selective mergers and acquisitions” opportunities, further testing the company’s capital discipline.

With ambitions to become a net-zero carbon emissions company by 2050, Exxon also has said it will invest $15 billion on lower-emissions solutions such as carbon capture and storage, hydrogen and biofuels through 2027.

Exxon this week announced a company reorganization, which elevated its low-carbon business into one of three major business units. As part of the reorganization, Exxon plans to move its headquarters next year to its massive Spring campus north of Houston, from the Dallas suburb of Irving.

“We’re well positioned for future success, irrespective of the path or pace (of the energy transition),” Woods said. “We have the flexibility to shift resources between traditional and low carbon businesses at any rate required. This provides a lot of optionality in positions us to lead industry in the energy transition and in earnings and cash flow growth.” paul.takahashi@chron.com twitter.com/paultakahashi