Exxon Mobil Corporation XOM announced Tuesday that it will reduce 2020 capital spending by 30% and lower cash operating expenses by 15% in response to low commodity prices resulting from oversupply and a drop in demand due to the coronavirus.
Capital investments for 2020 are now expected to be at $23 billion, down from Exxon's prior $33-billion estimate.
The cutbacks are most significant in the Permian Basin, a region where Exxon said short-cycle investments can be more easily adjusted to market conditions while preserving long-term value.
“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,” CEO Darren Woods said in a statement.
“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.”
ExxonMobil said it continues to monitor market developments and can make additional cutbacks if necessary.
Exxon Mobil shares were up 6.03% at $42.91 in Tuesday's premarket session.
The stock has a 52-week high of $83.49 and a 52-week low of $30.11.
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Photo by Michael Rivera via Wikimedia.
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