ExxonMobil has cut its 2020 capital spending by 30% and lowered cash operating expenses by 15% in response to low commodity prices resulting from oversupply and demand weakness from the COVID-19 pandemic, the company said Apr. 7.
Capital investments for 2020 are now expected to be $23 billion, down from $33 billion, and most cuts will be in the Permian basin. Reduced activity will affect the pace of drilling and well completions until market conditions improve, the company said. The company said it could exercise additional reduction options if required, and that it will continue evaluating the impacts of decreased demand on its 2020 production levels.
Developing the deepwater discoveries offshore Guyana remains an integral part of ExxonMobil’s long-term growth plans, it said. 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 being deferred, creating a potential delay in production startup of 6-12 months.
Final investment decision for the Rovuma LNG project in Mozambique, expected later this year, has been delayed. The Coral LNG development continues as planned.
ExxonMobil anticipates industry refinery output will decline in line with demand and available storage. Timing of expansion plans for select downstream and chemical facilities across the company’s portfolio will be adjusted. Details were not provided.
Despite the reductions, the company expects to meet its projected investment of $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 $50 billion over 5 years announced in 2018.
The company is maximizing production of products critical to the global response to the COVID-19 pandemic, including isopropyl alcohol, which is used to manufacture hand sanitizer, and polypropylene, which is used to make protective masks, gowns, and wipes. ExxonMobil also is supporting efforts to redesign and accelerate production of reusable face masks and shields to help alleviate the shortage for medical workers and first responders.