Exxon Mobil on Tuesday slashed oil exploration and production spending by $10 billion in response to the oil crash.
The Irving, Texas-based oil and gas producer on Tuesday reduced its 2020 capital budget to $23 billion, down 30 percent from $33 billion. The oil major also will cut operating expenses by 15 percent.
“After a thorough evaluation of the impacts of the pandemic and market conditions, we have worked closely with business partners to plan and execute capital adjustments that preserve long-term value, maximize cost efficiency, and put us in the strongest position when market conditions improve,” Chief Executive Darren Woods said in a statement.
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Exxon Mobil is the latest U.S. oil company to slash spending as the price of crude has fallen from near $60 a barrel to about $20 under the pressure of a price war and the economic effects of the coronavirus crisis. West Texas Intermediate was, the U.S. benchmark was at $26.38 on Tuesday morning.
More than 50 oil and gas companies have said they would cut capital spending by more than $37 billion. Companies have also reduced dividends, slashed executive compensation and furloughed workers. Global capital spending in the industry is expected to drop by up to $100 billion this year, according to Norwegian energy research firm Rystad Energy.
Most of Exxon’s capital spending cuts will take place in the Permian Basin, slowing drilling and well completions until market conditions improve. In addition, the company will delay its investment this year in the Rovuma liquefied natural gas project in Mozambique, Africa. While the company plans to continue drilling off the coast of Guyana in South America, some work will be deferred, potentially delaying production by up to a year.
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Despite the reductions, Exxon said it expects to meet its projected $20 billion investment in manufacturing facilities along the Gulf Coast, as well as its five-year target of investing $50 billion in the U.S.
During the pandemic, Exxon has increased production of products needed to fight the coronavirus, including isopropyl alcohol used in hand sanitizer and polypropylene used to make protective masks, gowns and wipes.
“While COVID-19 has had a significant impact on the global economy, we are confident that trade, transportation and manufacturing will recover,” Woods said in a statement. “ExxonMobil continues to invest in the projects that will position us to support economic recovery and capture value for our shareholders.”
paul.takahashi@chron.com
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https://www.houstonchronicle.com/business/article/exxon-mobil-oil-spending-10-billion-crash-covid-19-15184115.php
2020-04-07 21:24:41Z
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