ExxonMobil said today it is reducing its 2020 capital spending
by 30 percent and lowering cash operating expenses by 15 percent in
response to low commodity prices resulting from oversupply and
demand weakness from the COVID-19 pandemic.
Capital investments for 2020 are now expected to be about $23
billion, down from the previously announced $33 billion. The 15
percent decrease in cash operating expenses is driven by deliberate
actions to increase efficiencies and reduce costs, and includes
expected lower energy costs.
“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,” said Darren Woods, chairman and chief
executive officer of Exxon Mobil Corporation.
“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.”
ExxonMobil continues to monitor market developments and can
exercise additional reduction options if required. As market
conditions evolve, the company will continue evaluating the impacts
of decreased demand on its 2020 production levels as well as
longer-term production impacts.
The largest share of the capital spending reduction will be in
the Permian Basin, where short-cycle investments can be more
readily adjusted to respond to market conditions, while preserving
value over the long term. Reduced activity will affect the pace of
drilling and well completions until market conditions improve.
Importantly, the reductions will not compromise the scale,
functional excellence and cube development advantages that are
maximizing resource recovery and value in the Permian.
Developing the numerous world-class deepwater discoveries
offshore Guyana remains an integral part of ExxonMobil’s long-term
growth plans. Current operations onboard the Liza Destiny
production vessel are unaffected, and startup of the second phase
of field development remains on target for 2022, with the Liza
Unity production vessel currently under construction. As the
company waits for government approval to proceed with a third
production vessel for the Payara development, some 2020 activities
are now being deferred, creating a potential delay in production
startup of six to 12 months.
A final investment decision for the Rovuma liquefied natural gas
(LNG) project in Mozambique, expected later this year, has been
delayed. ExxonMobil continues to actively work with its partners
and the government to optimize development plans by improving
synergies and exploring opportunities related to the current
lower-cost environment. The Coral LNG development continues as
planned.
Globally, ExxonMobil anticipates industry refinery output will
decline in line with demand and available storage, and it will
maintain the ability to return to normal operations as demand
recovers. Timing of expansion plans for select downstream and
chemical facilities across the company’s portfolio will be adjusted
to capture efficiencies, slow spending pace and better align with a
return in commodity demand.
Despite the reductions, ExxonMobil expects to meet its projected
investment of $20 billion on U.S. Gulf Coast manufacturing
facilities made in its 2017 Growing the Gulf initiative. The
company also expects to reach its proposed U.S. investment of $50
billion over five years announced in 2018.
“While COVID-19 has had a significant impact on the global
economy, we are confident that trade, transportation and
manufacturing will recover,” said Woods. “ExxonMobil continues to
invest in the projects that will position us to support economic
recovery and capture value for our shareholders.”
To minimize risks presented by COVID-19 and maintain operations,
ExxonMobil has implemented enhanced cleaning procedures and
modified work practices at sites around the world.
The company is maximizing production of products critical to the
global response, including isopropyl alcohol, which is used to
manufacture hand sanitizer, and polypropylene, which is used to
make protective masks, gowns and wipes. ExxonMobil is also
supporting efforts to redesign and accelerate production of
reusable face masks and shields to help alleviate the shortage for
medical workers and first responders.
“I’m proud of our company’s response efforts,” said Woods. “On
our offshore platforms, in our refineries, at our lubes and
chemical plants and throughout our facilities worldwide, our people
are getting the job done and meeting the world’s needs for our
products while protecting themselves and others. I commend our
organization for their continued focus during these difficult
circumstances.”
About ExxonMobil
ExxonMobil, one of the largest publicly traded international
energy companies, uses technology and innovation to help meet the
world’s growing energy needs. ExxonMobil holds an industry-leading
inventory of resources, is one of the largest refiners and
marketers of petroleum products, and its chemical company is one of
the largest in the world. To learn more, visit exxonmobil.com and
the Energy Factor.
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CAUTIONARY STATEMENT
Statements of future events or conditions in this release are
forward-looking statements. Actual future results, including
capital and operating expense reductions; project plans, timing,
and outcomes; resource recoveries and production rates and timing;
future business results including cash flows, dividends, and
shareholder returns; accounting effects resulting from market
developments and ExxonMobil’s responsive actions; and impacts of
the COVID-19 pandemic on ExxonMobil’s business, and results, could
differ significantly depending on a number of factors including
supply and demand for oil, gas, and petroleum products and other
market factors affecting oil, gas, and petroleum product prices;
the outcome of government policies and actions, including actions
taken to address COVID-19 and to maintain the functioning of
national and global economies and markets; the ultimate impact of
COVID-19 on people and economies; the impact of company actions to
protect the health and safety of employees, vendors, customers, and
communities; actions of competitors and commercial counterparties;
the ability to access short- and long-term debt markets on a timely
and affordable basis; the actions of consumers; the timely
completion of development projects; other legal and political
factors including obtaining necessary permits and changes in tax or
environmental laws; unexpected operating events or technical
difficulties; the outcome of commercial negotiations including
negotiations with governments, private partners, and vendors; and
other factors discussed under Item 1A Risk Factors in ExxonMobil’s
most recent annual report on Form 10-K and set forth under the
heading “Factors Affecting Future Results” on the Investors page of
our website at exxonmobil.com. Statements regarding potential
future financial or operating results made at the Corporation’s
March 5, 2020 Investor Day should not be considered to be updated
or re-affirmed as of any later date except to the extent
specifically updated or re-affirmed in this release or in
subsequent public disclosures. References to oil-equivalent barrels
and other quantities of oil and gas in this release include amounts
that are not yet classified as proved reserves under U.S. SEC
regulations but which are expected ultimately to be recovered.
References to projects in this release may refer to a variety of
activities and are not intended to correspond to the term as used
on in any government payment transparency reports.
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