Capital investments for 2020 are now expected to be about US$23 billion, down from the previously announced US$33 billion. The 15% 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, maximise cost efficiency, and put us in the strongest position when market conditions improve,” said Darren Woods, Chairman and CEO.
“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.”
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.
Developing the numerous 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.
Despite the reductions, ExxonMobil expects to meet its projected investment of US$20 billion 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$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.”
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/07042020/exxonmobil-cuts-2020-capex-by-30/