Measures much deeper cuts on spending in the near future were detailed by Exxon Mobil Corp as the company reported a loss for the third quarter – a straight third quarter of loss for the energy giant. The company is still reeling under the economic impact of the Covid-19 pandemic on the demand for oil and gas and slump in oil prices.
Compared to a previously planned expenditure of $23 billion for this year, plans of cutting down on spending for 2021 to between $16 billion to $19 billion was announced by the largest oil producer of the United States by volume.
A reassessment of its assets of its natural gas holdings in North America was being conducted by the company and it would also impair around $25 billion to $30 billion if the company decides to make changes to its long term oil field development plans, the company said.
It is evaluating those assets this quarter.
So far this year, no writedowns in shale fields has had to be taken by Exxon. The company has been reiterating for quite some time that it believes that as more people join the middle class globally, there will be more demand for its products.
The company reported a net loss was $680 million, or 15 cents per share, for the third quarter compared to a profit of $3.17 billion, or 75 cents per share, reported by the company for the same period a year ago.
While expecting that it would exceed capital and cash expenses reduction targets for the entire current year, it also said that it would be implementing further cuts next year.
The company would be reducing cut its total workforce by about 15 per cent, the US oil producer said this week and said that it would be holding its fourth-quarter dividend flat at 87 cents a share. That was a clear signal that the current year would be one in which it would not raise its shareholder payout – which in turn would be the first year that the company would do so since 1982.
The sharp decline in energy prices and demand that has taken place this year has caught Exxon off guard, according to analysts.
Currently the price of US oil is 39 per cent lower than at the beginning of the year and there has been a global tanking of demand for fuel because of the Covid-19 pandemic.
(Adapted from FirstPost.com)