ExxonMobil cuts spending but predicts higher output

An Exxon sign is seen at a station in Manassas, Virginia. (AFP/Karen Bleier)

NEW YORK: US oil giant ExxonMobil said on Wednesday (Mar 4) it would reduce investment spending by nearly 12 per cent this year in response to lower crude-oil prices, but projected higher production.

Exxon Mobil Corp. told analysts in New York that it planned capital spending of about US$34 billion in 2015, down from US$38.5 billion in 2014.

For 2016 and 2017, investments, including on exploration for oil and gas, were projected at around US$34 billion annually, said the world's largest publicly traded oil and gas company. That was US$3 billion less per year than in previous forecasts.

Crude oil prices have dropped more than 50 per cent since last June, pushing energy companies and their contractors to cut back spending.

Rex Tillerson, ExxonMobil chairman and chief executive, noted the cyclical nature of the oil and gas industry. "We remain focused on the fundamentals," he told analysts. "We've been here before."

ExxonMobil said it expects to start up 16 major oil and natural gas projects during the next three years.

"ExxonMobil has a deep and diverse portfolio of opportunities around the world and a total resource base of more than 92 billion oil-equivalent barrels," Tillerson said in a statement. "We have unparalleled flexibility to select and invest in only the most attractive development projects."

ExxonMobil said it expected to increase daily production to 4.1 million barrels in 2015, an increase of 2.5 per cent from the prior year, and to 4.3 million barrels by 2017.

Tillerson said the projections were based on a Brent crude price of US$55 a barrel. Brent was fetching US$60.58 a barrel in afternoon trade in London.

The Irving, Texas-based company said the improved production would be supported by a ramp-up of several projects completed last year and new projects in 2015.

Seven new major developments planned this year include Hadrian South in the Gulf of Mexico, expansion of the Kearl oil-sands project in Canada, Banyu Urip in Indonesia and deepwater expansion projects at Erha in Nigeria and Kizomba in Angola.

According to analysts, ExxonMobil is the oil company best positioned to weather the decline in crude prices. ExxonMobil raised US$8 billion in the largest bond offering in the company's history, Bloomberg News reported on Wednesday.

Shares in ExxonMobil, a Dow component, fell 0.4 per cent to US$87.26 in morning trade on the New York Stock Exchange.