ExxonMobil to take $20 billion writedown, cut development spending

first_img FacebookTwitterLinkedInEmailPrint分享Bloomberg:Exxon Mobil Corp. is about to incur the biggest writedown in its modern history as the giant U.S. oil and gas producer reels from this year’s collapse in energy prices.Exxon — traditionally far more reluctant to cut the book value of its business than other oil majors — on Monday disclosed it will write down North and South American natural gas fields by $17 billion to $20 billion. That could make it the industry’s steepest impairment since BP Plc’s 2010 Gulf of Mexico oil spill that killed 11 workers and fouled the sea for months. Meanwhile, capital spending will be drastically reduced through 2025.The announcement comes in the waning days of a grueling year for Chief Executive Officer Darren Woods, who’s resorted to laying off thousands of employees, curtailing retirement benefits and canceling ambitious growth projects. The former refinery manager, who stepped into the top job in 2017, has been forced to recast his seven-year, $210 billion blueprint for rejuvenating Exxon’s aging portfolio of crude and gas holdings.In addition to dropping vast swaths of gas assets from the development queue, Woods is capping capital spending at $25 billion a year through 2025, a $10 billion reduction from his pre-pandemic target.Exxon has been warning shareholders since October that its gas assets were at risk of significant impairment. Previously, the energy titan’s largest writedown was for about $3.4 billion in 2016, according to Bloomberg Intelligence. Assets removed from Exxon’s development plans include so-called dry gas resources in Appalachia and the Rocky Mountains, Oklahoma, Texas, Louisiana and Arkansas, as well as western Canada and Argentina, the company said. It will attempt to sell “less strategic” assets.The writedown stems from former CEO Rex Tillerson’s decision a decade ago to buy XTO Energy for $35 billion rather than spend years building an in-house shale business. At the time, the outlook for North American gas prices was bright because demand was rising faster than supply. Instead, fracking was a victim of its own success, unleashing so much gas that it overwhelmed demand and the infrastructure needed to handle it, resulting in a prolonged stretch of depressed prices.[Kevin Crowley]More: Exxon faces historic writedown after energy markets implode ExxonMobil to take $20 billion writedown, cut development spendinglast_img

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