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ExxonMobil has cut spending plans, postponed a profit growth target, and will write off up to $ 20 billion in assets in the fourth quarter as it reviews its portfolio in the wake of the crisis-induced drop in oil prices. this year’s pandemic.
America’s largest oil producer by volume said on Monday it would spend $ 16 billion to $ 19 billion next year, then $ 20 to $ 25 billion a year through 2025, down from an initial budget from $ 30 billion to $ 35 billion.
The company said it will write off $ 17 billion to $ 20 billion in natural gas assets in western Canada, the United States and Argentina – all of which will be taken out of its development plan.
The latest cuts follow six brutal months for the US oil industry and Exxon, a company that in the past embodied the power of American business. Once the most valuable company in the world, it is now worth less than its local rival Chevron and has reported losses every quarter this year.
Managing Director Darren Woods said the “high level” of the company’s asset base – getting rid of underperforming assets and focusing on the best – would improve earnings “and rebuild the balance sheet’s ability to perform. manage reliable dividend cycles ”.
The goal of doubling revenues by 2025 has been postponed to 2027.
Exxon said the steps would allow it to focus on core growth projects in the Permian Basin of New Mexico and Texas, deepwater developments in Guyana and Brazil, and some chemical developments.
The potential write-downs come just over a decade after Exxon bought U.S. natural gas producer XTO Energy for $ 41 billion – a deal in which Exxon is said to have largely overpaid.
Unlike European rivals such as Royal Dutch Shell and BP, Exxon refused to cut its dividend, which had been increased earlier in 2020 for the 37th consecutive year.
The company believes that a strategy to continue to increase oil and gas production will be rewarded with a rebound in fuel prices as demand recovers and supply growth slows due to underinvestment. in exploration and production activities.
Exxon has not officially changed its plans to increase production from less than 4 million barrels per day now to 5 million barrels per day by 2025, although Permian production growth will likely be slower than expected.
The oil group posted a net loss of $ 680 million in the three months to the end of September, up from $ 3.2 billion in profit in the same period last year – its third consecutive quarterly loss.
The company is cutting 14,000 jobs globally, or 15% of its workforce, as part of its efforts to reduce operating costs and protect its dividend.
Exxon’s share price has fallen by almost half since the start of the year.
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