The oil and gas giant has prioritized its near-term capital spending on advantaged assets. Exxon Mobil is ready to cut its spending on exploration and production by writing off $20 million of investments in natural gas.
The U.S. oil and gas tycoon, Exxon Mobil Corp. (XOM) isfloating against tough tides and has decided to cut off its spending on its natural gas projects. The company announced that over the next four years it will drop its spending, aiming for a more fainted oil price recovery.
The company has completed its new business plan and is looking forward to focusing on its near-term capital spending that will have the most potential for future growth.
Exxon will continue its developments in the U.S. Permian Basin and Guyana. This means that the company is targeting to explore new wells in Brazil and take advantage of Chemicals projects to enhance high-value performance products.
Exxon Mobil has had a devasted period during the last six months especially. The COVID-19 impact has created massive economic instability causing the oil industry to plunge badly. Despite the slow recovery of oil prices in the past few months, they are still too low compared to the start of 2020.
Exxon is the largest U.S. oil producer by volume. The company plans to spend up to $16 billion-$19 billion in 2021 and almost $20 billion-$25 billion in the following four years. This is the updated budget of the company from a previously announced budget of $30 billion-$35 billion.
Exxon will write off approximately $17-$20 billion of natural gas assets in the U.S., western Canada, and Argentina. These cut-offs will be removed from the development plan as the company wants to ensure financial stability for the coming year, considering unprecedented economic circumstances.
Previously, the company resisted writing down assets on various occasions. Many of the large oil firms went through asset write-downs including Royal Dutch Shell by $22 billion, BP by almost $17 billion, and Chevron by $10 billion.
Exxon Mobil has suffered drastically and has reported losses in all the quarters of 2020 so far. The pandemic effect has really got on the nerves of the oil deity. With heavy quarterly losses, Exxon was removed from the Dow Jones industrial average in August.
Moreover, the company also plans to seize up to 14,000 jobs which reflect 15% of its global workforce.
Following the assets write off new, Exxon Mobil Corp. (XOM) shares have surged. On Tuesday, the stock soared closed at $38.50 up by almost 1%.
As we write this at 10:51 A.M. EST, XOM was trading at $39.59 soaring by 2.82%.