Exxon, Chevron slam brakes on shale as oil demand tumbles
Skip to main content
  • Home
  • Economy
    • Aviation
    • Bazaar
    • Budget
    • Industry
    • NBR
    • RMG
    • Corporates
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Features
    • Book Review
    • Brands
    • Earth
    • Explorer
    • Fact Check
    • Family
    • Food
    • Game Reviews
    • Good Practices
    • Habitat
    • Humour
    • In Focus
    • Luxury
    • Mode
    • Panorama
    • Pursuit
    • Wealth
    • Wellbeing
    • Wheels
  • Epaper
  • More
    • Subscribe
    • Videos
    • Thoughts
    • Splash
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • COVID-19
    • Games
    • Long Read
    • Interviews
    • Offbeat
    • Podcast
    • Quiz
    • Tech
    • Trial By Trivia
    • Magazine
  • বাংলা
The Business Standard

Tuesday
January 31, 2023

Sign In
Subscribe
  • Home
  • Economy
    • Aviation
    • Bazaar
    • Budget
    • Industry
    • NBR
    • RMG
    • Corporates
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Features
    • Book Review
    • Brands
    • Earth
    • Explorer
    • Fact Check
    • Family
    • Food
    • Game Reviews
    • Good Practices
    • Habitat
    • Humour
    • In Focus
    • Luxury
    • Mode
    • Panorama
    • Pursuit
    • Wealth
    • Wellbeing
    • Wheels
  • Epaper
  • More
    • Subscribe
    • Videos
    • Thoughts
    • Splash
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • COVID-19
    • Games
    • Long Read
    • Interviews
    • Offbeat
    • Podcast
    • Quiz
    • Tech
    • Trial By Trivia
    • Magazine
  • বাংলা
TUESDAY, JANUARY 31, 2023
Exxon, Chevron slam brakes on shale as oil demand tumbles

Global Economy

Reuters
02 May, 2020, 10:10 am
Last modified: 02 May, 2020, 10:13 am

Related News

  • US House passes bill limiting drawdowns from strategic oil reserve
  • Oil prices settle lower on stronger supply outlook
  • Putin requests clarifying methodology for oil price determination in taxation by 1 March
  • Oil edges up as US crude inventories rise less than expected
  • Oil rises slightly; focus on China demand and US outlook

Exxon, Chevron slam brakes on shale as oil demand tumbles

They each announced global shut-ins of up to 400,000 barrels per day (bpd) this quarter due to lockdowns to fight the coronavirus pandemic

Reuters
02 May, 2020, 10:10 am
Last modified: 02 May, 2020, 10:13 am
Pump jacks operate in front of a drilling rig in an oil field in Midland, Texas US August 22, 2018. Picture taken August 22, 2018. Photo:Reuters
Pump jacks operate in front of a drilling rig in an oil field in Midland, Texas US August 22, 2018. Picture taken August 22, 2018. Photo:Reuters

Exxon Mobil Corp and Chevron Corp are slamming the brakes on oil output, as the top two US producers plan for combined global shut-ins of 800,000 barrels per day in response to plunging crude prices and fuel demand.

Both companies on Friday outlined deep cuts in investments in the Permian shale basin, the top US oilfield where growth in recent years made America the world's top oil producer and a net exporter for the first time in decades. They each announced global shut-ins of up to 400,000 barrels per day (bpd) this quarter due to lockdowns to fight the coronavirus pandemic.

Exxon and Chevron have been sidelining Permian drilling equipment since the market started crashing in March. US crude prices have plunged nearly 70% this year to under $20 a barrel, and traded in negative territory on April 20 for the first time ever.

Oil and gas output at both US producers rose in the first quarter with the companies racing to produce 1 million barrels per day in the Permian. Then fuel demand sank nearly a third due to travel and business lockdowns, while a flood of Russian and Saudi oil hit the market when they abandoned production cuts.

"We would intend to bring activity back to the Permian when we see prices recover," Chevron Chief Financial Officer Pierre Breber said in an interview.

The two oil majors spent heavily in the last two years to expand in the Permian. Shale production can be brought on faster than deepwater and other oil exploration projects but requires near-constant drilling to maintain output.

Exxon's biggest cuts will come in the Permian, "where the short-cycle investments are more readily adjusted," said Exxon Chief Executive Officer Darren Woods.

He added that because shale wells produce big volumes at first and then decline rapidly, it is "beneficial in long term" to ensure "we're bringing those high production rates into a market that's more conducive." Exxon will sideline 75% of its Permian drilling rigs, keeping 15 working.

The company posted a $610 million first-quarter loss, its first quarterly loss in three decades, on a nearly $3 billion inventory writedown reflecting lower margins and prices. Chevron posted a $3.6 billion profit on asset sales and improved refining results, and also said it would further reduce spending this year.

(For a graphic on Exxon's earnings, click here: https://tmsnrt.rs/3aTTnrp)

Both companies will slash spending budgets by 30% this year. Chevron cut its capital spending budget to $14 billion and Exxon has set 2020 spending at $23 billion, the lowest in four years.

Even though their results topped Wall Street's reduced estimates, Exxon shares fell 7% to $43.14 while Chevron dropped 2.8% to $89.44.

Chevron's additional spending cuts will help it pay for its dividend and make it "a defensive energy holding and a relative safe haven in very stormy seas," said Jennifer Rowland, an analyst with Edward Jones.

Exxon's balance sheet "is strong enough to withstand the current environment," but it needs oil prices around $75 per barrel this year to break even versus around $50 on average for its peers, said Biraj Borkhataria of RBC Europe Limited.

US crude futures have recovered a bit since settling in negative territory on April 20, but the current price of around $19 per barrel remains below the cost of production for many. International oil prices are around $26 per barrel.

Both Chevron and Exxon maintained their quarterly dividends.

Other oil majors are also slashing investments and seeking ways to conserve cash. Royal Dutch Shell cut its dividend for the first time since World War Two and reported first-quarter profits down nearly half compared to a year-ago. BP Plc's first-quarter profit tumbled by two-thirds and its debt climbed to its highest on record.

Coronavirus chronicle / Top News

Oil / Exxon Mobil Corp / Chevron

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, U.S., September 4, 2018. REUTERS/Yuri Gripas/File Photo
    IMF approves Bangladesh's $4.5 billion loan proposal
  • Despite downturn 3 dozen listed firms plan Tk7,500cr investment
    Despite downturn 3 dozen listed firms plan Tk7,500cr investment
  • Mysterious resignation of SIBL chairman, addl MD
    Mysterious resignation of SIBL chairman, addl MD

MOST VIEWED

  • FILE PHOTO: The logo of the Adani Group is seen on the facade of its Corporate House on the outskirts of Ahmedabad, India, January 27, 2023. REUTERS/Amit Dave/File Photo
    Adani's nationalist rebuttal ignores accusations, says Hindenburg
  • Russian President Vladimir Putin and Saudi Arabia's Crown Prince Mohammed bin Salman attend a meeting in Riyadh, Saudi Arabia, October 14, 2019. Sputnik/Alexei Nikolsky/Kremlin via REUTERS
    Putin and Saudi crown prince discuss OPEC+ cooperation to maintain price stability
  • Unilever’s global initiative Transform is working to build a platform that will help enterprises prosper during and after the pandemic. Photo: Reuters
    Unilever picks Dutch dairy chief as new CEO
  • Photo: Bloomberg
    Adani rout hits $71 billion as fight with Hindenburg intensifies
  • Photo: Collected
    Asian markets mixed as traders await rate decisions
  • The logo of the Adani Group is seen on the facade of one of its buildings on the outskirts of Ahmedabad, India, April 13, 2021. REUTERS/Amit Dave/
    Adani's $2.5 billion share sale faces crucial day after Indian rout

Related News

  • US House passes bill limiting drawdowns from strategic oil reserve
  • Oil prices settle lower on stronger supply outlook
  • Putin requests clarifying methodology for oil price determination in taxation by 1 March
  • Oil edges up as US crude inventories rise less than expected
  • Oil rises slightly; focus on China demand and US outlook

Features

Photo: Courtesy

The Hawkers: Where minimalism meets motifs

18h | Brands
TBS illustration

Where do Shariah-compliant mutual funds stand in Bangladesh

17h | Panorama
Sketch: TBS

A subsidy war without winners

16h | Panorama
Photo: Collected

Oppo Reno 8T first look revealed!

17h | Brands

More Videos from TBS

two more factories of the country got platinum certificate.

two more factories of the country got platinum certificate.

8h | TBS Today
Iconic villains of Bollywood

Iconic villains of Bollywood

9h | TBS Entertainment
General knowledge "Gravity"

General knowledge "Gravity"

7h | Videos
Will tanks turn the tide for Ukraine?

Will tanks turn the tide for Ukraine?

8h | TBS World

Most Read

1
Picture: Collected
Bangladesh

US Embassy condemns recent incidents of visa fraud

2
Illustration: TBS
Banking

16 banks at risk of capital shortfall if top 3 borrowers default

3
Bapex calls candidates for job test 9 years after advert!
Bangladesh

Bapex calls candidates for job test 9 years after advert!

4
Photo: Collected
Splash

Hansal Mehta responds as Twitter user calls him 'shameless' for making Faraaz

5
A frozen Beyond Burger plant-based patty. Photographer: AKIRA for Bloomberg Businessweek
Bloomberg Special

Fake meat was supposed to save the world. It became just another fad

6
Representational Image
Banking

Cash-strapped Islami, Al-Arafah and National turn to Sonali Bank for costly fund

EMAIL US
[email protected]
FOLLOW US
WHATSAPP
+880 1847416158
The Business Standard
  • About Us
  • Contact us
  • Sitemap
  • Privacy Policy
  • Comment Policy
Copyright © 2023
The Business Standard All rights reserved
Technical Partner: RSI Lab

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - [email protected]

For advertisement- [email protected]