Exxon plans to cut Permian production growth by ~10% by 2021

Mar. 05, 2020 10:24 AM ETExxon Mobil Corporation (XOM)XOMBy: Carl Surran, SA News Editor48 Comments
  • Exxon Mobil (XOM -4.5%) again approaches 15-year lows after the company says it will stick with its strategy of "leaning into this market when others have pulled back" while remaining "mindful of the current market environment."
  • The company plans to spend $30B-$35B/year through 2025, with capex rising to ~$33B this year from $31B in 2019.
  • Exxon likely is "in for another tough year," says RBC analyst Biraj Borkhataria. With weak oil and gas prices and muted refining margins, Exxon will "barely" cover its capital spending with free cash flow and its dividend coverage will be "the worst" among its rivals, he says.
  • Nevertheless, Exxon says in a slide presentation that it will operate at a "reduced pace" in the Permian Basin by 60K bbl/day over the next two years, before reaching 600K bbl/day in 2021.
  • Exxon had 58 drilling rigs working in the Permian earlier this year, but it plans to lower its rig count there by ~20% this year.
  • The company also says its balance sheet has "significant financial capacity" to pay for project spending while growing the dividend, adding that debt is "available at historically low cost."

Recommended For You

Comments (48)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.