…but says Guyana remains priority in its operations

EVEN as ExxonMobil announced, on Tuesday, that it is reducing its 2020 capital spending by 30 per cent, and lowering cash operating expenses by 15 per cent, due to the effects of COVID-19, the company stated that developments offshore Guyana remain an “integral” part of its operations.

COVID-19 has taken a toll on the entire world and businesses such as ExxonMobil, involved in the drilling of oil, have not been able to escape the negative impacts which have vastly reduced the demand for fuel due to a sharp drop in travels.

In response to low commodity prices resulting from oversupply and demand weakness from the pandemic, the Company announced that capital investments for 2020 are now expected to be about $23 billion, down from the previously announced $33 billion. It represents a 15 per cent decrease in cash operating expenses driven by deliberate actions to increase efficiencies and reduce costs, and includes expected lower energy costs.

“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,” Chairman and chief executive officer of Exxon Mobil Corporation, Darren Woods said.

Despite that fact, the Company is still actively involved in developmental plans in Guyana where it has made 16 discoveries, since May 2015, with an estimated recoverable resource base of over 8 billion oil-equivalent barrels. On Tuesday, the Company stated that, notwithstanding the pandemic, Guyana remains priority. “Developing the numerous world-class deep-water discoveries offshore Guyana remains an integral part of ExxonMobil’s long-term growth plans. Current operations onboard the Liza Destiny production vessel are unaffected, and startup of the second phase of field development remains on target for 2022, with the Liza Unity production vessel currently under construction.”

However, the Company noted that it is awaiting government’s approval to proceed with a third production vessel for the Payara development. The delay has caused some 2020 activities to be deferred, creating a potential delay in production startup of six to 12 months.

A final investment decision for the Rovuma liquefied natural gas (LNG) project in Mozambique, expected later this year, has also been delayed. The Company’s largest share of the capital spending reduction will take place in the Permian Basin where it said short-cycle investments can be more readily adjusted to respond to market conditions, while preserving value over the long term.

Meanwhile, it intends to continue to monitor market developments by evaluating the impacts of decreased demand on its 2020 production levels as well as longer-term production impacts. Additional reduction options will be exercised if required.

Woods said: “The long-term fundamentals that underpin the company’s business plans have not changed — population and energy demand will grow, and the economy will rebound. Our capital allocation priorities also remain unchanged. Our objective is to continue investing in industry-advantaged projects to create value, preserve cash for the dividend and make appropriate and prudent use of our balance sheet.”

Globally, ExxonMobil anticipates industry refinery output will decline in line with demand and available storage, and it will maintain the ability to return to normal operations as demand recovers.  Despite the reductions, the Company expects to meet its projected investment of $20 billion on U.S. Gulf Coast manufacturing facilities made in its 2017 Growing the Gulf initiative. It also expects to reach its proposed U.S. investment of $50 billion over five years announced in 2018. “While COVID-19 has had a significant impact on the global economy, we are confident that trade, transportation and manufacturing will recover,” said Woods. “ExxonMobil continues to invest in the projects that will position us to support economic recovery and capture value for our shareholders.”