ExxonMobil Takes Axe to 2020 Spending Plans
ExxonMobil announced on April 7 it would cut its planned capital expenditure by 30% to $23bn, and also target a 15% reduction in cash operating expenses, in response to bearish market conditions brought on by the Covid-19 pandemic.
"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, maximise cost efficiency, and put us in the strongest position when market conditions improve,” CEO Darren Woods commented.
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"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," he continued. " 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."
The US major said it would continue to monitor how the market develops and make further cuts if necessary, it said. It will also evaluate the implications of weaker demand for its production plans in 2020 and beyond.
Hardest hit by the cuts will be ExxonMobil's operations in the US Permian basin. A decision on the Rovuma LNG project in Mozambique, expected this year, has also been delayed, giving the major time to work with its partners and the local government to optimise development plans. But its Coral floating LNG venture off Mozambique, operated by Italian Eni, remains on track.
ExxonMobil will maintain its focus on major deepwater finds off Guyana, where the launch of Liza Destiny Phase 2 oil development will go ahead in 2022 as planned. Its Payara oil project could fall six to 12 months behind schedule, however.
Downstream, the company will adjust the timeframe of expansion plans at its refining and chemical facilities to capture efficiency, delay spending and time their launch to coincide with a rebound in commodity prices.