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Callaghan O’Hare/Bloomberg
Exxon Mobil
introduced on Monday that it was writing down the value of its pure gasoline belongings by $17 billion to $20 billion as the corporate cuts capital expenditures and adjustments its funding plans to deal with higher-returning tasks.
It is usually delaying a few of its efficiency targets. CEO Darren Woods mentioned at this 12 months’s investor day that the corporate would double earnings by 2025, however he’s now pushing that objective again to 2027.
The information got here out at 4:45 p.m. ET. Exxon (ticker: XOM) stock fell 0.2% in after-hours buying and selling, after falling 5.1% throughout regular buying and selling hours. Exxon stock has cratered this 12 months together with different oil names as Covid-19 has crushed demand. It’s down 45% 12 months up to now.
Exxon’s capital expenditures will stay subdued for years, after the corporate had beforehand anticipated to repeatedly spend greater than $30 billion on capital bills. It can cut back its capital and exploration finances to $16 billion to $19 billion in 2021, and $20 billion to $25 billion yearly to 2025, the corporate mentioned in a press launch.
Exxon mentioned its “reliable dividend remains unchanged.” The dividend has been a precedence for buyers, however the firm hasn’t been overlaying it with cash circulate.
Exxon is focusing its growth portfolio on tasks with excessive potential returns, together with in Guyana, the U.S. Permian Basin, and Brazil. “Assets removed include certain dry gas resources in the Appalachian and Rocky Mountains, Oklahoma, Texas, Louisiana, and Arkansas in the United States, and in western Canada and Argentina,” the corporate mentioned.
In a securities submitting the corporate additionally mentioned it will droop bonuses for all eligible workers this 12 months “in gentle of difficult trade circumstances and ensuing firm earnings.
It isn’t the one vitality firm writing down the value of its belongings amid the most recent downturn within the oil patch.
Chevron
(CVX) took a $10 billion cost final 12 months because it lowered its estimates for the value of varied belongings, primarily in pure gasoline. It has continued to take billions of {dollars} worth of impairments this 12 months, writing down the total value of its Venezuela operations within the second quarter.
BP
(BP) and
Royal Dutch Shell
(RDS.A) have additionally introduced massive write-downs.
On Monday, Exxon provided some hope for the long run, with the discharge saying “the enterprise atmosphere within the fourth quarter is exhibiting indicators of enchancment regardless of the resurgence in Covid-19 circumstances and accompanying financial restrictions.”
“Prices and margins for many of our businesses have improved from the third quarter and when coupled with continuing efforts to reduce spending and capture additional efficiencies, quarter-to-date cash flow has improved versus our plan assumptions,” Woods mentioned in an announcement.
Exxon had talked about a attainable write-down in its final quarterly earnings launch, however Monday’s announcement added a number of particulars that had been new.
Write to Avi Salzman at avi.salzman@barrons.com
