Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Exxon scales back shale ambitions to focus on lower costs, dividend preservation

Stock MarketsMar 03, 2021 04:00PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: FILE PHOTO:An Exxon sign is seen at a gas station in the Chicago suburb of Norridge 2/2

By Jennifer Hiller and Shariq Khan

HOUSTON (Reuters) - Exxon Mobil Corp (NYSE:XOM) is lowering its ambitions for oil and gas output, it said Wednesday, as it focuses on cutting costs and preserving dividends to win back investors that have soured on the company after years of overspending.

The top U.S. oil producer incurred a historic loss of $22.4 billion last year and is trying to convince a skeptical Wall Street that it can rebound after years of overspending left it deeply indebted and lagging behind rivals better geared for a world demanding cleaner fuels.

Exxon last year fell out of the Dow Jones index of top U.S. companies and shares fell to a two-decade low. Activist investors are pushing it to lessen its reliance on fossil fuels.

"The priority right now is to rebuild the balance sheet," Exxon Chief Executive Darren Woods said on a media call following a virtual analysts day that emphasized the company's commitment to lower spending and reducing debt, which has ballooned to $67.6 billion from $37.8 billion two years earlier.

That said, some analysts criticized Exxon's spending plans, saying the company's focus is likely to shift more to oil than gas, unlike rivals Chevron Corp (NYSE:CVX) and Royal Dutch Shell (LON:RDSa). It is also taking a measured approach to spending in its low-carbon group as other global oil giants aggressively move towards renewable projects.

Woods reaffirmed plans to keep annual project spending at or below $19 billion in 2021 and between $20 billion and $25 billion through 2025. Production will remain largely flat at around 3.7 million barrels of oil and gas per day.

Previously, Woods had planned to hike spending to as much as $35 billion per year to build production, but has reversed course after costly misfires on U.S. shale and Canadian oil sands.

Shares were up 2.3% to $57.37 as oil prices climbed on Wednesday. The stock is up more than a third this year, but over the longer-term trails broader averages.

Oil and gas production spending will focus on Guyana, Brazil and U.S. shale oil. The company expects its 400,000 barrels of daily output in west Texas and New Mexico to rise to about 700,000 by 2025, "based on market conditions," said Senior Vice President Neil Chapman. Two years ago, it forecast 1 million barrels per day in the Permian as early as 2024.

Overall output is likely "to steadily shift from gas to liquids, which is at odds with most peers," said Biraj Borkhataria, analyst with RBC Capital Markets.

Exxon vowed to increase its investments in carbon capture and storage as part of a new low-carbon business. Such efforts will account for about 3% of new spending, Exxon said, up from 1% previously.

"It is still far from the double-digit levels of companies such as Shell and Total," said Pavel Molchanov, analyst with Raymond James.

Exxon expects $2 billion of a proposed $3 billion in savings from workforce reductions and efficiencies, said Andrew Swiger, chief financial officer. It has said it could cut around 14,000 employees and contractors, or 15% of its global workforce, by the end of the year.

Engine No. 1, a newly formed activist firm that is trying to place four new directors on Exxon's board, was critical of the company's efforts.

"ExxonMobil today presented a vision of the future that we believe risks continued long-term value destruction, including a lack of serious diversification efforts and the hope that carbon capture will enable the company to avoid long-term evolution," the firm said in a press release.

On Monday, Exxon named activist investor Jeffrey Ubben and former Comcast (NASDAQ:CMCSA) executive Michael Angelakis to its board as it attempts to assuage investor concerns.

"Maybe the best news about the board additions is that the 'our way or the highway' position that Exxon has taken for many years may be changing," said Mark Stoeckle, senior portfolio manager at Adams Funds.

Exxon scales back shale ambitions to focus on lower costs, dividend preservation
 

Related Articles

Toyota Q4 profit nearly doubles, beats expectations
Toyota Q4 profit nearly doubles, beats expectations By Reuters - May 12, 2021

By Eimi Yamamitsu TOKYO (Reuters) -Toyota Motor Corp reported on Wednesday its fourth-quarter operating profit jumped 92%, as it shrugged off chip-supply issues and as its sales...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Antonio Trevino
Antonio Trevino Mar 03, 2021 10:58AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
So, buy?
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email