ExxonMobil will scale down its capital expenditure for 2020 by 30% to US$23Bn, down from US$33Bn
The company will also lower cash operating expenses by 15% in response to low commodity prices resulting from oversupply and demand weakness created, in part, by the Covid-19 pandemic. ExxonMobil said the decrease in cash operating expenses is driven by a need to increase efficiency and reduce costs.
ExxonMobil chairman and chief executive Darren Woods said the decision was taken “after a thorough evaluation of the impacts of the pandemic and market conditions”.
“The long-term fundamentals that underpin the company’s business plans have not changed -- population and energy demand will grow, and the economy will rebound. Our capital allocation priorities also remain unchanged. Our objective is to continue investing in industry-advantaged projects to create value, preserve cash for the dividend and make appropriate and prudent use of our balance sheet,” Mr Woods said.
The largest share of the reductions will occur in the Permian Basin of West Texas and New Mexico, where Exxon will cut back on drilling and fracking until market conditions improve. However the company said the reductions will not compromise the scale, functional excellence and cube development in the basin.
The company will also delay a final investment decision on its Rovuma LNG project in Mozambique but the Coral LNG development will continue as planned.
Despite the reductions, the company expects to meet its projected investment of US$20Bn on US Gulf Coast manufacturing facilities made in its 2017 ’Growing the Gulf’ initiative. The company also expects to reach its proposed US investment of US$50Bn over five years announced in 2018.
Mr Woods said ExxonMobil was confident that trade, transportation and manufacturing would recover from the pandemic adding, “ExxonMobil continues to invest in the projects that will position us to support economic recovery and capture value for our shareholders.”
ExxonMobil will continue to monitor market developments and may exercise additional reduction options if required.