Oil and natural gas giant Exxon Mobil (XOM) - Get Report on Tuesday announced plans to cut back its multi-year investment spree in shale, natural gas and deep-water oil production and will cut planned capital spending this year by $10 billion as the coronavirus pandemic has slammed both energy demand and oil prices.
In a statement, the largest U.S. oil producer announced that it has set its 2020 capital expenditures at $23 billion, and may reduce that even further if warranted. Exxon had previously announced expected spending plans of as much as $33 billion this year. It spent $26 billion last year.
“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, maximize cost efficiency, and put us in the strongest position when market conditions improve,” CEO Darren Woods said in a statement.
The company said its biggest spending cuts will focus on its operations in the Permian Basin, “… where short-cycle investments can be more readily adjusted to respond to market conditions, while preserving value over the long term.”
That move comes on the heels of a White House meeting of major oil and energy company executives, who have been grappling not only with the pandemic’s impact on global energy demand but a war of brinkmanship between Saudi Arabia and Russia that has produced a global oil supply glut and plunged prices to depths not seen since the 2008 financial crisis.
Despite the reductions, Exxon Mobil still expects to meet its projected investment of $20 billion on U.S. Gulf Coast manufacturing facilities made in its 2017 "Growing the Gulf" initiative. The company also expects to reach its proposed U.S. investment of $50 billion over five years announced in 2018.
Shares of Exxon were up about 5% at $42.30 in trading on Tuesday.