Darren Woods, Chairman and CEO, Exxon Mobil. Michael Newberg | CNBC

Exxon Mobil issued new financial guidance on Wednesday, saying its profit potential and ability to generate cash look better than they did last year. But Exxon's stock price slumped as the company prepared investors for an increase in spending in the coming years. Shares of Exxon ended the day down 1 percent, after initially falling nearly 3 percent during Exxon's presentation at its annual investor day. The stock is up more than 16 percent this year. Exxon expects its capital spending to grow by $4 billion this year, to $30 billion. Next year, the company expects to spend $33 billion to $35 billion, and $30 billion to $35 billion in the following years through 2025. The company says its oil and gas exploration over the next three years will focus on deepwater offshore drilling and projects that can feed its growing portfolio of liquefied natural gas developments.

Exxon Senior Vice President Neil Chapman says the company can drill offshore cheaply because equipment and service rates are depressed following a period of relatively low exploration activity during the oil price downturn. Commenting on Wednesday's stock price slide, CFRA energy analyst Stewart Glickman said much of the industry is doing more with less capital spending. While Exxon is boosting spending and production, other drillers are increasing output while still cutting expenditures, he said. "Exxon is so big it has to replace a lot of barrels every year. They're probably thinking with a longer-term focus than most" exploration and production companies, he said In addition to guidance on production and capital spending, investors were also hoping Exxon would return cash to shareholders by buying back stock, said Pavel Molchanov, equity analyst at Raymond James. "Exxon has been the only supermajor in recent quarters without an active buyback program (beyond simply offsetting dilution), and management is still not giving any clarity on when it might resume. The lack of buyback clearly remains a source of frustration for investors," he said in an email.

Improved profit outlook

The Irving, Texas-based energy giant expects earnings to grow by $4 billion this year. That compares with profit growth of $1.1 billion last year, before accounting for the effects of U.S. tax reform. Exxon believes its annual earnings potential will increase by 140 percent between 2017 and 2025, compared with its outlook for 135 percent growth last year. Exxon now thinks its earnings potential between this year and 2025 is about $9 billion higher than previously forecast. "Given the success we experienced last year and the progress we're making on our plans, we have even greater confidence in our ability to grow value for our shareholders," Exxon chairman and CEO Darren Woods said in a statement before the event.