ExxonMobil is slashing this year’s capital spending plans by $1obn and will cut cash operating expenses by 15 per cent as it seeks to preserve its dividend in the face of the crude price collapse sparked by coronavirus. Capital investment this year will be $23bn, down from the previously announced $33bn. The biggest cuts will be in the Permian Basin, the heart of the US shale boom, where Exxon’s drilling will slow – the second time in two months that the company has lowered its output projections for the area.
“We haven’t seen anything like what we are experiencing today,” said chief executive Darren Woods said on Tuesday. He added that Exxon was anticipating a 20-30 per cent short-term drop in global oil demand. Exxon said it could also reduce its planned spending next year as it navigated the downturn.
“We have the capacity to do more if we need to,” said Mr Woods. “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, who on Friday attended a meeting of oil industry chief executives with President Donald Trump at the White House, did not endorse calls from some producers to impose tariffs on Russia and Saudi Arabia to compel them to end their price war.
“Our position has always been that free markets for our industry work best,” he said. “It allows the free flow of product, it also ensures that the most efficient producers continue to produce.” The Financial Times reported on Saturday that US and Canadian officials had held discussions about imposing tariffs on foreign oil supplies to North America.
Production from Permian shale this year would fall by about 15,000 barrels of oil equivalent a day, said Mr Woods. Previously, Exxon said output would come in at about 360,000 b/d. In 2021 output is projected to be 100,000 to 150,000 b/d lower than the target of 600,000 b/d.