ExxonMobil US$67 billion in debt

Feb 07, 2021 News

– Intends to use Guyana to bail itself out

ExxonMobil CEO and Chair, Darren Woods (Photo: artictoday.com)

Kaieteur News – ExxonMobil’s Corporate Secretary, Stephen Littleton, and its Chief Executive Officer (CEO), Darren Woods, both noted during the company’s 2020 Q4 earnings call last Tuesday, that the supermajor is US$67.6 billion in gross debt. The company intends to fund Guyana, one of its two most profitable businesses, in order to start paying down that debt.
Woods told analysts, “With downstream and chemical margins at the bottom of the 10-year historical range, we can fund our highest-return investments in Guyana, the Permian and the chemical business and begin paying down debt at Brent prices just above $50 a barrel.”
Littleton revealed yesterday that in 2020, the company was only able to lower its debt by US$1.2 billion to US$67.6 billion. Woods told analysts that the company has set a “hard limit” of US$70 billion for its debt.
“We didn’t want to go above that and working hard to bring that down, expect for that to come down in the first quarter. And we’ll continue to work to bring that down to really rebuild the strength of the balance sheet. It’s one of the three capital allocation priorities and we think absolutely critical to underpin the business we’ve got going forward and to ride through the cycles that we face. And clearly, 2020 was a very deep down cycle, one that, frankly, we’ve never seen before.”
Woods said he is pleased that the capital structure the company put in place to respond to the unprecedented market was successful, and that ExxonMobil intends to rebuild in a way that will allow it to weather ups and downs.
ExxonMobil’s performance in 2020 resulted in a loss of US$22 billion, a tumble in production and a slump of about one-third in revenues, from the previous year.
In defense of its performance, ExxonMobil’s Chair of the Board, Darren Woods said “The past year presented the most challenging market conditions ExxonMobil has ever experienced. While the effects of the pandemic significantly impacted our 2020 results, our previously executed strategic initiatives and reorganizations enabled us to respond decisively to permanently improve our cost structure, drive greater efficiencies across our businesses, and emerge a stronger company. These improvements are expected to deliver structural expense savings of $6 billion per year by 2023, relative to 2019.”
Some don’t see ExxonMobil rebounding from its losses in 2020. In an invited comment, International Lawyer, Melinda Janki had told Kaieteur News how ExxonMobil is in financial trouble, as it has been posting massive losses and lay-offs, and published a decision in November to write down tens of billions in assets. The decision was meant to free up cash to fund a handful of mega-projects, such as Guyana.
Janki, an advocate for a quicker transition to renewables, had advised Guyana to cut its ties with ExxonMobil.
“Their share price is falling.” Janki had said. “On every measure, ExxonMobil’s performance is going down. Let us make sure that Guyana does not go down as well.”

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