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Bloomberg
Exxon Mobil Corp is ripping up its debt-fuelled, $30 billion-a-year plan to rebuild an aging worldwide portfolio after cash flow evaporated and threatened the company’s vaunted dividend.
The shift by the Western world’s premier oil explorer represents an about-face after more than two years of doing pretty much the opposite of the its biggest rivals, who have been shrinking and looking to a future beyond fossil fuels.
As recently as March, the Texas giant had pinned its future to huge capital spending on oil and natural gas at a time when peers were exploring ways to decarbonise.
Exxon CEO Darren Woods’ plan was to lean on the company’s impeccable balance sheet to drill for gushers and still cover almost $15 billion in annual dividends. If cash flow fell short, Exxon’s stellar credit rating would allow it to borrow its way through lean times, or so the thinking went.
But the black swan event of a global pandemic that smashed energy demand amid a stubborn glut of crude overwhelmed Woods’ ambitions.
Cash flow from operations fell to zero in the second quarter, Exxon disclosed, and one of the CEO’s top lieutenants announced all bets were off. The company is pursuing “significant potential†budget reductions and some managers may find themselves out of a job as a result, Senior Vice President Neil Chapman said.