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Exxon Mobil Throttles Back Shale Spending Plans Amid Oil-Price War

Oil and natural gas giant Exxon Mobil plans to cut back its multi-year investment spree as the coronavirus pandemic slams both energy demand and oil prices.

Oil and natural gas giant Exxon Mobil  (XOM)  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.”

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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.