This highlights a key challenge for the oil and gas industry: It's spending increasing amounts of money to achieve marginally higher, if not lower, rates of production.
Major oil companies are struggling to tap new sources of oil fast enough in an environment where big finds are rarer and costlier to exploit. Potential fields lie deep under the seabed, or in shale rock formations that require expensive technology to crack open. The cost to produce a barrel "clearly is going up," Tillerson said, with "the size, the magnitude and the conditions with which we're making some of these investments."
When companies can't find oil fast enough, they're stuck with aging fields where output is declining. International production agreements also limit the amount of oil they can sell as prices rise.
Chevron Corp., BP and Royal Dutch Shell all produced less oil last year than in the prior year.
Exxon and the other have in the past few years increasingly focused on developing natural gas. Exxon believes natural gas will replace coal as the second-most popular fuel by 2025. Natural gas has accounted for more than half of Exxon's proven reserves since 2009, and in 2010 the company spent $30 billion to acquire XTO Energy to become the largest natural gas producer in the U.S.
Its natural gas bet so far hasn't paid off. Prices have plummeted this year following a production boom in North America and weak winter heating demand. Natural gas futures hit a 10-year low of $2.302 per 1,000 cubic feet on Wednesday.
Competitors such as Chesapeake Energy Corp. and ConocoPhillips are cutting back on natural gas production in an effort to reduce a national surplus.
Exxon says it won't reduce gas production, though it will focus its future projects on bringing more oil to market. The company said that production of crude and other liquid hydrocarbons will increase by 2 to 3 percent per year through 2016, outpacing increases in natural gas production.
Altogether, Exxon said 21 oil and gas productions will begin production by 2014, and it expects to add more than 1 million barrels per day of oil and gas by 2016.
Tillerson also shared his views about a variety of other topics at a news conference following the analyst meeting.
Gas Prices: The price of a gallon of unleaded regular has risen more than 40 cents this year because the cost of oil has gone up, Tillerson said. He noted that the price of crude, combined with taxes, makes up about 88 percent of the price that motorists see at the pump.
Iran: If Iran tried to make good on threats to block off a key shipping route into the Persian Gulf, it could create "a significant amount of volatility" in world oil prices. But Tillerson thinks such a situation would be resolved within months because "the world would put all of its efforts toward reopening those straits."
Tax Reform: Tillerson said President Obama's proposals to cut government subsidies for oil and gas companies were unfair. "You don't treat people differently who are in different industries, and you certainly don't treat companies differently from their competitors."
Iraq: Exxon remains committed to production agreements it signed with leaders in Iraqi Kurdistan. Iraqi officials have criticized Exxon's dealings with the semi-autonomous region and have asked the oil giant to choose between its contract with the Kurds and another production contract with the central Iraqi government. "We're committed to both of those" contracts, Tillerson said. He wouldn't comment further.
Exxon shares fell 87 cents in afternoon trading Thursday, to $84.96.