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ExxonMobil slashes 2020 capital spending by 30%


Biggest reductions in Permian

Plains cuts capex by 47%

Continental to reduce production by 30%

Houston — ExxonMobil said Tuesday it will slash its 2020 capital spending by $10 billion as North America's largest energy company cuts its bottom line deeper than the other integrated oil majors around the world.

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The moves comes as US crude oil pipeline giant Plains All American Pipeline said it will cut its spending by almost 50% and Oklahoma oil producer Continental Resources aims to reduce its production volumes by 30% in April and May.

The decisions come just as OPEC+ is scheduled to meet on Thursday to make a potentially broad agreement to scale back oil output amid the global coronavirus pandemic. The announcements Tuesday show US companies are making moves to scale back their volumes even if the US doesn't formally join in on any global deal with Saudi Arabia, Russia and other nations.

As for ExxonMobil, the oil major said it will cut its capital spending about 30% from $33 billion to $23 billion. CEO Darren Woods said the biggest reductions will come in the Permian Basin where ExxonMobil is by far the most active driller. The other majors, including Chevron, Royal Dutch Shell, BP and Total, all previously announced cuts of 20% or 25%.

ExxonMobil also will defer its final investment decision on the Rovuma LNG project in Mozambique to at least 2021.

In the company's other major focal point offshore of Guyana, Woods said the first two phases of development remain on schedule. But the third phase, called Payara, may be delayed by up to a year.

"After a thorough evaluation of the impacts of the pandemic and market conditions, we have worked closely with business partners to plan and execute capital adjustments that preserve long-term value, maximize cost efficiency, and put us in the strongest position when market conditions improve," Woods said in a statement.


Houston-based Plains All American said it will cut its capital spending by 47% down to $1.55 billion.

That reduction includes the $600 million saved on the deferral until at least 2021 of the Red Oak Pipeline joint venture with Phillips 66. The Red Oak is slated to move crude volumes from the Cushing storage hub in Oklahoma down to the Texas Gulf Coast.

Big reductions from Plains also indicate the pipeline firm is anticipating fewer crude volumes moving forward. Plains also is cutting its distribution payouts to investors by 50%.

"We are taking a number of actions in response to the current dynamic and uncertain market conditions to further strengthen our balance sheet and further enhance our liquidity and long-term financial flexibility," said Plains CEO Willie Chiang in a statement. "These actions include significantly reducing and continuing to challenge our capital program, reducing our distribution, progressing asset sales, and reducing costs, while remaining focused on operating safely and responsibly."

Likewise, while the move from Continental Resources to reduce oil volumes is minor on a global scale, Continental founder and chairman Harold Hamm is a key energy ally of President Donald Trump.

Hamm has pushed Trump to impose tariffs on Saudi oil, but Continental's announcement Tuesday comes just before the OPEC+ meeting at a time when Saudi Arabia and Russia are asking the US to join in any big global deal to cut production.

"Global crude oil and product demand is estimated to have been impacted by 30% due to COVID-19. Accordingly, we are reducing our production for April and May 2020 in a similar range," said Continental CEO Bill Berry in a statement.

Permian drillers cutting back
Company Revised capex ($B) Change % Notes
Apache Corp. 1.1 -37% Suspending all Permian drilling
BP 12 -25% Shale production down 14% to 430,000 boe/d; cut BPX shale spending in half by $1 billion
Callon Petroleum 0.71 -27% Cutting from 9 to 5 rigs in Q2, then to 2 or 3
Centennial Resource Development 0.32 -50% Going from five rigs to one in Delaware Basin
Chevron 16 -20% Permian production outlook down 20% to 125,000 boe/d with nearly $2 billion in Permian cuts
Cimarex Energy 0.72 -45% Production outlook down 8% to 86,200 b/d
Concho Resources 2 -26% Permian pure play
ConocoPhillips 5.9 -11% Production outlook down 2% to 1.23 million boe/d; slow US shale activity, delay Alaska drilling
Devon Energy 1 -44% Defer Eagle Ford activity, cut from STACK, Powder River Basin
Diamondback Energy 1.7 -41% Oil production outlook down 10% to less than 188,000 b/d; pulling two-third of rigs
Earthstone Energy 0.06 -67% Production down 11% to 14,250 boe/d, completing fewer Midland Basin wells
EOG Resources 4.5 -31% Production outlook down 12% to 456,000 boe/d; focusing drilling in Eagle Ford, Delaware basins
Extraction Oil & Gas 0.2 -42% Company reduces 2020 cash G&A budget 18% to $40-$50 million and reduced officers pay by 10%
ExxonMobil 23 -31% Cutting most in Permian, delay Rovuma LNG and Guyana phase 3
Laredo Petroleum 0.29 -36% Production down 5% to 81,000 boe/d, reduce four rigs to one, suspend completions
Marathon Oil 1.9 -21% Pull all 3 Oklahoma rigs, reducing Delaware activity
Matador Resources* 0.45 -38% Pulling 3 of 6 Delaware Basin rigs
Noble Energy 1.2 -29% Majority of cuts from Delaware Basin
Occidental Petroleum 2.8 -47% Production outlook down 6% to 1.29 million boe/d; slicing dividend by 86%
Ovintiv 2.2 -19% Pulling 16 rigs from Permian, Anadarko, Montney
Parsley Energy 1 -41% Permian pure play pulling 10 of 15 rigs
PDC Energy 0.81 -23% Production outlook down 5% to 200,000 boe/d; cutting rigs/crews in Delaware, Colorado basins
Pioneer Natural Resources 1.8 -45% Production outlook down 12% to 211,000 b/d; Permian pure play pulling 11 of 22 rigs
QEP Resources 0.44 -23% Suspending Permian drilling/completions
Royal Dutch Shell 20 -20% Cutting operating costs up to $4 billion
WPX Energy 1.34 -23% Production outlook down 6% to 150,000 b/d
Canadian drillers cutting back
Company Revised capex ($B) Change % Notes
ARC Resources 0.21 -40% Delay Canadian drilling, completions
Athabasca Oil 0.06 -32% Shut in Hangingstone oil sands, delay drilling
Baytex Energy 0.19 -49% Suspend Canadian drilling, shut in some heavy oil wells
Birchcliff Energy 0.2 -19% Delay completing 10 Gordondale, Alberta wells
Bonterra Energy 0.17 -64% Suspend Canadian drilling, completions
Canadian Natural Resources 2.04 -27% Delaying new activity
Cardinal Energy 0.21 -53% Suspend dividend and Canadian drilling/completions
Cenovus Energy 0.57 -43% Suspend crude-by-rail, suspend dividend
Crescent Point Energy 0.54 -35% Delaying Western Canada drilling
Enerplus Corp. 0.23 -40% Cease North Dakota drilling/completions
Gear Energy 0.01 -74% Suspend Canadian drilling/completions
Husky Energy 1.72 -27% Suspend Western Canada drilling
Kelt Exploration 1 -36% Delaying Canada drilling, pipeline tie-ins
MEG Energy 0.14 -20% Delaying some Canadian well completions
NuVista Energy 0.17 -24% Reduce Canadian drilling, completions
Ovintiv 2.2 -19% Pulling 16 rigs from Permian, Anadarko, Montney
Paramount Resources 0.15 -46% Slowing Canadian activity
Pipestone Energy 0.04 -60% Delay Canadian drilling, completions
Seven Generations Energy 0.65 -19% Delaying Alberta drilling activity
Suncor 2.89 -26% Delay drilling/offshore, suspend most crude-by-rail
Tamarack Valley Energy 0.69 -43% Slow Canadian drilling, completions
Vermilion Energy 0.26 -20% Cutting dividend 83%
Whitecap Resources 0.14 -43% Slow Canadian drilling, completions

Source: Companies