ExxonMobil Expects $17bn Write-down on Gas
US supermajor ExxonMobil said November 30 it expects to take an after-tax impairment of $17-$20bn on several undeveloped natural gas assets in Q4 2020 following a decision to focus on near-term priorities in Guyana, the US Permian, Brazil and its chemicals unit.
Capital spending in 2021 will be cut to $16-$19bn from an initial budget of $30-$35bn and then held in the $20-$25bn/yr range through 2025.
Certain dry-gas assets – in the Appalachian basin, the Rocky Mountain region, Oklahoma, Texas, Louisiana and Arkansas in the US and in western Canada and Argentina – will be removed from future development plans. It will also increase its focus on monetising less strategic North American dry gas assets through divestment, contingent on buyer valuations.
“Continued emphasis on high-grading the asset base – through exploration, divestment and prioritisation of advantaged development opportunities – will improve earnings power and cash generation and rebuild balance sheet capacity to manage future commodity price cycles while working to maintain a reliable dividend,” CEO Darren Woods said.
In Canada, ExxonMobil’s 69.6%-owned affiliate, Imperial Oil, said it “no longer plans to develop a significant portion” of its unconventional portfolio in Alberta, and will take a fourth quarter after-tax impairment of between C$900mn (US$694mn) and C$1.2bn.
“These non-core assets are non-producing, undeveloped assets and the company does not expect any material future cash expenditures related to this impairment,” it said. “Not included in this impairment are the high-value, liquids-rich portion of the company’s unconventional asset portfolio, which the company still plans to develop.”
As part of its plans to cut 14,000 jobs world-wide, ExxonMobil also expects to see about 300 job reductions in Canada, about two-thirds at Imperial Oil and the rest at its direct Canadian subsidiary, ExxonMobil Canada.