Outletchristianlouboutin13

Energy giant faces historic write-down as oil and gas markets implode

Exxon Mobil Corp. is about to incur the biggest write-down in its modern history as the giant US 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 that 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’s 2010 Gulf of Mexico oil spill killed 11 workers and fouled the sea for months.

Meanwhile, Exxon’s capital spending will be drastically reduced through 2025.

Exxon is also suspending employee bonuses for this year. Top executives, however, will still receive stock awards.

The announcement came in the waning days of a grueling year for chief executive Darren Woods, who has 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.

This year has been particularly bruising for America’s most iconic oil explorer. Exxon lost money for three consecutive quarters, an unprecedented streak, the shares dipped to an 18-year low, and the company was ejected from the bosom of blue-chip stocks, the Dow Jones industrial average. Woods also plans to cut 15 percent of the company’s workforce by the end of next year.

Exxon, the largest company in the S&P 500 as recently as 2012, now ranks just inside the top 50 as energy loses its luster and technology giants grow. Chevron Corp. now has a larger market valuation than Exxon.

Unlike its European peers, Exxon has so far chosen to stick with its $15 billion-a-year dividend and has increased borrowing in recent months to fund it and its other capital priorities. On an annualized basis, the dividend has been increased each year for almost four decades.

Optimism that coronavirus vaccines will soon restore global economic growth buoyed crude prices in recent weeks but the impact of the contagion on Big Oil is likely to be long-lasting. With European giants Royal Dutch Shell and BP accelerating their pivot to renewables and Exxon locking in drastic spending cuts, the flow of capital into big, traditional developments is expected to shrink in coming years.

Exxon has been warning shareholders since October that its gas assets were at risk of significant impairment. Previously, its largest write-down was for about $3.4 billion in 2016, according to Bloomberg Intelligence.

Source Article

  • Partner links