ExxonMobil to Prioritize Capital Investments on High-Value Assets
30 Novembre 2020 - 10:45PM
Business Wire
- Capital and exploration investments of $16-$19 billion in 2021;
$20 billion to $25 billion annually to 2025
- Near-term investment priorities: Guyana, Permian, Brazil,
Chemicals performance products
- Certain dry gas assets removed from development plan; after-tax
impairment of $17 billion to $20 billion
- Commitment to cost reduction, reliable dividend remains
unchanged
ExxonMobil has completed a review of its forward business plans
and will prioritize near-term capital spending on advantaged assets
with the highest potential future value, including developments in
Guyana and the U.S. Permian Basin, targeted exploration in Brazil
and Chemicals projects to grow high-value performance products.
“Recent exploration success and reductions in development costs
of strategic investments have further enhanced the value of our
industry-leading investment portfolio,” said Darren Woods, chairman
and chief executive officer for Exxon Mobil Corporation. “Continued
emphasis on high-grading the asset base - through exploration,
divestment and prioritization of advantaged development
opportunities - will improve earnings power and cash generation,
and rebuild balance sheet capacity to manage future commodity price
cycles while working to maintain a reliable dividend.”
The company said its annual business plan focused on the
following priorities and actions:
- Leveraging the significant cost savings realized in 2020 that
are on track to exceed announced reductions of $10 billion or 30
percent of capital spending and 15 percent of cash operating
expenses. Key to ongoing expense management are business line
reorganizations and efficiencies that include global workforce
reduction of 15 percent by year-end 2021.
- Continued pacing of investments. The company expects $16
billion to $19 billion in capital and exploration expenditures in
2021, and $20 billion to $25 billion annually through 2025.
- Preserving the long-term value of the company’s investment
portfolio by offsetting costs associated with project delays. The
company plans to double earnings by 2027, when viewed on the same
price and margin assumptions used in the 2020 Investor Day
materials.
- Removal of less strategic assets from its development plan as a
result of the growing strength of its portfolio. 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 decision will
result in a non-cash, after-tax fourth quarter impairment charge of
approximately $17 billion to $20 billion.
- Increased focus on monetization of less strategic assets to
grow the portfolio of potential divestments, including certain
North American dry gas assets, contingent on buyer valuations.
Woods said 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.
About ExxonMobil
ExxonMobil, one of the largest publicly traded international
energy companies, uses technology and innovation to help meet the
world’s growing energy needs. ExxonMobil holds an industry-leading
inventory of resources, is one of the largest refiners and
marketers of petroleum products, and its chemical company is one of
the largest in the world. To learn more, visit exxonmobil.com and
the Energy Factor.
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Cautionary Statement
Statements related to outlooks, projections, goals, accounting
estimates, descriptions of strategic plans and objectives, and
other statements of future events or conditions are forward-looking
statements. Actual future results, including financial and
operating performance; future earnings growth; the impact of the
COVID-19 pandemic on results; planned capital and cash operating
expenses for future years and the ability to meet or exceed
announced reductions against prior plans; total capital
expenditures and mix; cash flow; capital allocation and debt
levels; dividend and shareholder returns; business and project
plans, timing, costs and capacities; accounting and financial
reporting effects, including potential impairment charges resulting
from changes in current development plan strategy or divestment
plans; and the pace and outcome of divestments, could differ
materially due to a number of factors. These include global or
regional changes in the supply and demand for oil, natural gas,
petrochemicals, and feedstocks and other market conditions that
impact prices and differentials; the outcome of government policies
and actions, including actions taken to address COVID-19 and to
maintain the functioning of national and global economies and
markets; the impact of company actions to protect the health and
safety of employees, vendors, customers, and communities; the
severity, length and ultimate impact of COVID-19 on people and
economies, including the nature and pace of economic recovery as
well as the ability of ExxonMobil and its vendors and contractors
to maintain operations while taking appropriate health protective
measures for employees and others; reservoir performance; the
outcome of exploration projects and timely completion of
development and construction projects; changes in law, taxes, or
regulation including environmental regulations, and timely granting
of governmental permits; war, trade agreements and patterns,
shipping blockades or harassment, and other political or security
disturbances; opportunities for and regulatory approval of
potential investments or divestments; the capture of efficiencies
within and between business lines and the ability to maintain
near-term cost reductions as ongoing efficiencies while maintaining
future competitive positioning; general economic conditions
including the occurrence and duration of economic recessions; and
other factors discussed under the heading Factors Affecting Future
Results on the Investors page of our website at www.exxonmobil.com
and in Item 1A of ExxonMobil’s 2019 Form 10-K and subsequent Forms
10-Q for the quarters ended March 31, 2020, June 30, 2020, and
September 30, 2020. Statements regarding plans or potential
outcomes for the fourth quarter 2020 and for 2021 through 2027
remain subject to final assessments and analysis based on the
company plan approved by the Board of Directors in November 2020.
We assume no duty to update these statements as of any future
date.
Forward-looking statements contained in this release regarding
the potential for future earnings growth potential are not
forecasts of actual future results. These figures are provided to
help quantify the potential future results and goals of
currently-contemplated management plans and objectives including
planned project investments, plans to grow Upstream production
volumes, plans to increase sales in our Downstream and Chemical
segments and to shift our Downstream product mix toward
higher-value products, continued highgrading of ExxonMobil’s
portfolio through our ongoing asset management program, initiatives
to improve efficiencies and reduce costs, capital expenditures and
cash management, and other efforts within management’s control to
impact future results. These figures are intended to quantify for
illustrative purposes management’s view of the potentials for these
efforts and the potential to achieve these results subject to a
timeframe of 2027 in comparison to the 2025 time frame previously
communicated at our 2020 Investor Day as a result of the impacts of
COVID and related events. These prices are not intended to reflect
management’s forecasts for future prices or the prices we use for
internal planning purposes. The reference to the potential for
doubling of earnings by 2027 is in comparison to 2017 adjusted
earnings, i.e., reported earnings of $19.7 billion excluding the
effects of U.S. tax reform and impairments resulting in adjusted
2017 earnings of $15.3 billion.
Future growth potential as presented at the company’s 2020
Investor Day was based on pre-COVID assumptions including $60 real
prices for Brent crude, $3/mbtu Henry Hub prices for natural gas,
and historical Downstream and Chemical margins over the 2015-2019
time period, and no significant changes in applicable laws or
regulations or fiscal terms vs the environment at that time.
Updated assumptions supporting the company’s future view of growth
potential will be discussed at the company’s next Investor Day
scheduled for March 2021.
References to the resource base and other quantities of oil,
natural gas or condensate may include estimated amounts that are
not yet classified as “proved reserves” under SEC definitions, but
which are expected to be ultimately recoverable. The term “project”
as used in this report can refer to a variety of different
activities and does not necessarily have the same meaning as in any
government payment transparency reports.
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