Last though not least: Exxon chops spending by 30%


By Jennifer Hiller

HOUSTON (Reuters) – Exxon Mobil Corp XOM.N on Tuesday throttled behind investment in shale, healthy gas and low H2O production, slicing designed collateral spending by 30% this year as a coronavirus pestilence saps appetite direct and oil prices tumble.

Oil companies have pulled behind 2020 spending skeleton by an normal of 22% as countries extent atmosphere travel, sequence businesses sealed and tell residents to stay home to fight a pestilence that has killed some-more than 76,000 worldwide.

In a one-two punch, wanton prices have sunk scarcely 60% this year on revoke direct for fuel spurred by a pandemic-driven mercantile strike and an oil cost war.

“We haven’t seen anything like what we’re experiencing today,” Exxon Chief Executive Darren Woods pronounced on Tuesday as he minute spending cuts on a discussion call.

Exxon was a final of a oil majors to move, and a spending cut was deeper than those of many rivals.

The largest U.S. oil writer set 2020 collateral outlay during $23 billion, down $10 billion from a progressing devise and a lowest in 4 years. Spending could dump even serve and continue into subsequent year if required, Woods said.

For a striking on a tip oil producers’ spending cuts, greatfully click here:

Graphic – Oil Majors Cut Capex:


The association took no movement on a shareholder dividend, that analysts had been closely examination for any reduction. Exxon spent $14.8 billion final year on shareholder payouts.

“We perspective these moves agreeably as it helps revoke a money upsurge shortfall and supports a dividend,” pronounced Edward Jones researcher Jennifer Rowland.

Exxon’s cuts will import a heaviest on U.S. shale, where it had plunked down $6 billion in 2017 for drilling leases and increased outlay in a expostulate to siphon around 360,000 barrels per day (bpd) this year.

Its outlay there this year will be around 15,000 bpd revoke than designed and adult to 150,000 bpd revoke subsequent year, Woods said.

Exxon did not fact a Permian spending cuts, where it recently had 58 drilling rigs during work. RBC Capital Markets researcher Biraj Borkhataria estimated it was spending adult to $6 billion a year in a Permian, “and we see no reason because capex and a supply count can't be reduced by 50% during a smallest in 2020.”

Exxon expects universe oil direct to decrease by 25% to 30% in a brief term, Woods said.

“Storage is apropos really tight. Logistics are apropos tight,” Woods said, forecasting widespread oil-well “shut-ins opposite a industry.”

It behind an investment preference to build a liquefied healthy gas (LNG) devise in Mozambique and some spending in offshore Guyana, where it has done one of a world’s largest oil discoveries in years. Current operations in Guyana are not affected, it said.


First-quarter results, due out May 1, will be harm by an benefit dump of about $1.4 billion in oil and gas, and about $800 million in refining, both compared with a fourth quarter, a association said. Chemical benefit will pitch to a distinction of about $100 million, according to total expelled on Tuesday.

Exxon had set an desirous expansion devise dual years ago to revitalise benefit and output, and Woods reiterated a company’s faith that tellurian direct for oil would grow.

“Populations and appetite direct will continue to grow,” he said. “The economy will miscarry notwithstanding a shocks from a pandemic.”

Exxon’s 30% cut in spending exceeds that of oil majors’ BP PLC, Chevron Corp, Royal Dutch Shell PLC and Saudi Aramco, that have done 20%-25% reductions. BP and Chevron also cut deeply into their shale oil businesses.

The 9 vital oil companies have slashed a total $38 billion, or 22%, from their initial 2020 spending skeleton for $175 billion. Overall, oil companies have cut $54 billion in designed devise investments.

The U.S. oil major’s shares surged scarcely 5% to $42.44 in late morning trading.

Exxon’s marketplace value has slumped 42% this year as a oil-price fight between Saudi Arabia and Russia has taken a fee on a appetite sector. However, a batch has been a slouch for years, dropping 54% over a final 5 years compared with an 18% benefit in a benchmark U.S. SP 500 batch index.

(Reporting by Jennifer Hiller in Houston and Arathy S Nair in Bangalore; Editing by Bernadette Baum)

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