ExxonMobil today said it is reducing its 2020 capital spending by 30% and lowering cash operating expenses by 15% in response to low commodity prices resulting from oversupply and demand weakness from the coronavirus pandemic.
Capital investments for 2020 are now expected to be about $23bn, down from the previously announced $33bn.
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 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.
A final investment decision for the Rovuma LNG project in Mozambique, expected later this year, has been delayed.
ExxonMobil continues to actively work with its partners and the government to optimise development plans by improving synergies and exploring opportunities related to the current lower-cost environment. The Coral LNG development continues as planned.
“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 minimise 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 maximising production of products critical to the global response, including isopropyl alcohol, which is used to manufacture hand sanitiser, 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.