Exxon Mobil expecting up to 20 bn in write-downs
The oil giant is cutting spending as a consequence.
Exxon Mobil Corporation (NYSE: XOM) has backed down on its plan to increase spending to increase gas and oil production through 2025 after three consecutive quarterly losses. The company now plans to reduce the book value of its assets by $ 20 billion as the Texas oil company rethinks its strategy for the next decade. The oil giant lost over $ 2.3 billion for three quarters in a row this year as the pandemic hurt demand for fossil fuels. The company has now lowered its spending forecast for the next five years. Exxon Mobil plans to spend around $ 19 billion or less in 2021 and between $ 20 billion and $ 25 billion annually from 2022 to 2025. The company previously planned to spend more than $ 30 billion a year on capital expenditures through 2025. The company has also said it will stop investing in some natural gas assets. It also expects a large write-off of around $ 17 billion to $ 20 billion in the fourth quarter of 2020. The spending cut plans are a correction to CEO Darren Woods' plans to spend around $ 230 billion to boost profits. According to Woods' 2018 plan, the company could produce an additional 1 million oil and gas drums by 2025. However, it seems that this plan came at the wrong time as the COVID-19 pandemic has tapped old demand and caused prices to plummet this spring. The company expects profits to double by 2027 but has not set a specific target on increasing oil and gas production. Over the past few months, executives have reiterated that Exxon Mobil is reassessing its manufacturing goals. In a statement, Woods said the oil giant is focusing on improving its profits and solidifying its balance sheet to prepare for future price volatility and to hold its dividends, which generate about $ 15 billion annually. In October, the company said it will reduce its workforce by about 15%, including full-time and contract employees. As part of its financial planning, the company lowered expectations for future oil prices by 11% to 17% over the next seven years.