Exxon Mobil (XOM) - Get Report shares were higher after the biggest U.S. oil company said it would write down the value of natural gas properties $17 billion to $20 billion and cut project spending next year.
Shares of the Irving, Texas, energy giant, which like its industry has struggled with depressed demand stemming from the coronavirus pandemic, at last check were 1.9% higher at $38.85.
Exxon Mobil said it was removing gas projects from its plans in Appalachia, the Rocky Mountains, Oklahoma, Texas, Louisiana, Arkansas, Canada and Argentina.
The impairment is the company's biggest ever such write-down.
At the top end of the range, Bloomberg reported, it would be the industry’s steepest impairment since BP’s (BP) - Get Report 2010 Gulf of Mexico oil spill, which killed 11 workers and polluted the sea for months.
Chairman and Chief Executive Darren Woods said in a statement that the business environment in the fourth quarter is showing signs of improvement despite the resurgence in covid-19 cases and accompanying economic 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," he said.
Exxon Mobil's capital spending will range between $16 billion and $19 billion next year, down from $23 billion in 2020.
This year’s capex had been reduced from a planned budget of $33 billion, as the company slowed projects in Africa and the Permian Basin in New Mexico and West Texas.
In August Exxon Mobil was removed from the Dow Jones Industrial Average.
In October, the company said it planned to cut 1,900 U.S. jobs, while reducing its global headcount around 15% over the next two years as the coronavirus pandemic shutdown slashed energy demand in key economies around the world.
Last week, Exxon Mobil said it planned to cut as many as 300 jobs in Canada.