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ExxonMobil slashes global spending, production to focus on Stabroek Block
…Guyana projected to supply quarter of its total oil, gas production worldwide
Kaieteur News – ExxonMobil has slashed its global oil and gas production from its operations globally to 3.7 million barrels per day in stark contrast to its push to ramp up production in Guyana.
This would lead to Guyana accounting for a quarter of ExxonMobil’s total daily global production, which is being ramped up in the Stabroek Block, projected at 750,000 barrels per day in five years time.
ExxonMobil CEO, Darren Woods
These disclosures were had during its Investor Day Conference on Wednesday last, when Chief Executive Officer, Darren Woods, announced too that ExxonMobil has taken a decision to further slash its capital expenditure globally—a stark contrast to its increased expenditure in the Guyana Stabroek Block.
Investors have since been told that the company estimates its 2021-capital budget to be in the range of US$16 to US$19 billion, which indicates a decline from the 2020 level of US$21.4 billion. Capital spending by the company is expected however, to rebound to between US$20 and $25 billion per annum through 2025.
These investments will be focused primarily in Guyana’s Stabroek Block in addition to its Brazil operations and the Permian Basin in the United States.
In the Permian Basin, production is expected to rise to 700,000 barrels per day in 2025, from 370,000 barrels daily in 2020.
Anticipating its investments to generate more than 30 percent returns, investors were told that the company’s greater focus going forward is “on more profitable assets and divesting the less profitable ones.”
This, the CEO noted “will enable it to generate more profits and cash flows, while keeping production (globally) essentially flat.”
The Company this past month, in an effort to focus on its more lucrative operations, dumped assets in the United Kingdom and previously in Canada.
Investors were informed that ExxonMobil’s slash in its global production for oil and gas production will also allow the company to focus on cutting costs and preserving dividends “to win back investors that have soured on the company after years of overspending.”
The company, a day before the Investor Conference, had announced that it will also cut 300 jobs or 7 percent of its workforce in Singapore.
This follows the historic losses recorded by the company of US$22.4 billion last year for at the time; it had fallen out of the Dow Jones index of top US companies while its shares plunged to a two-decade low.
ExxonMobil and its partners in the Stabroek Block—Hess Corporation and China’s National Offshore Oil Company (CNOOC)—have so far claimed to have invested some US$20B in the Stabroek Block.
Oil prices have since rebounded to US$70 per barrel with an upward trajectory in prices in light of the Organization of the Petroleum Exporting Countries’ (OPEC) decision to limit global production.
ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited had first oil back in December 2019.
The block ramped to peak first-phase output in the fourth quarter of 120,000 barrels of oil per day while two additional projects are under development that will begin production in 2022 and 2024, respectively.
Those projects will utilize Floating Production Storage and Offloading (FPSOs) vessels with capacities of 220,000 barrels of oil per day.
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