In a move that appears to have come as no major surprise to the rest of the global oil and gas industry, the US super major ExxonMobil this week announced that it was slashing US$10 billion from its capital 2020 expenditure, in effect reducing spending by 15 per cent. The company hastens to assure, however, that the spending cuts leave its capital allocation priorities, including its current operations offshore Guyana “unchanged.”
“Our capital allocation priorities also remain unchanged,” noted company Chairman and Chief Executive Officer Darren Woods. “Our objective is to continue investing in industry-advantaged projects to create value, preserve cash flow for the dividend and make appropriate and prudent use of our balance sheet.”
In a statement last Tuesday that pays particular attention to its operations offshore Guyana ExxonMobil says that the “world class deepwater discoveries offshore Guyana” remain a major component of its long-term growth plan. “Current operations onboard the Liza Destiny production vessels 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,” the ExxonMobil statement noted. It notes, however, that “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.”
Overall, ExxonMobil’s Tuesday announcement comes against the backdrop of low commodity prices resulting from a combination of oversupply and wilting demand for oil linked to the coronavirus pandemic that has halted the major sectors of the global economy in their tracks.
The company says that its decision to impose a spending cut was due to “actions to increase efficiencies and reduce costs.” It says that the decision comes following “a thorough evaluation of the impacts of the (coronavirus) pandemic and market conditions,” adding that it had “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,”
In the statement, Woods strikes a confident note on ExxonMobil’s performance, going forward, noting that “while COVID-19 has had a significant impact on the global economy, we are confident that trade, transportation and manufacturing will recover. ExxonMobil,” Woods says, “continues to invest in the projects that will position us to support economic recovery and capture value for our shareholders.”
