EXXON SETS SPENDING, JOB CUTS TO PRESERVE DIVIDEND

Exxon Mobil Corp is preparing deep spending and job cuts, according to people familiar with the matter, as it fights to preserve a 8% shareholder dividend with a multi-billion-dollar quarterly loss looming, Jennifer Hiller, Ron Bousso and Dmitry Zhdannikov reported for Reuters on July 31, 2020.

It was unclear how extensive the cuts will be. The largest U.S. oil company slashed this year’s budget by 30% in April, but Chief Executive Darren Woods’s turnaround through rebounding demand and increased asset sales have not panned out and losses are climbing.

On Friday, Exxon is expected to report a $2.63 billion second-quarter loss, according to Refinitiv Eikon data, on sharply lower prices and weaker production, the first back-to-back quarterly losses in at least 36 years. Shares are down 35% so far this year as the coronavirus pandemic has crushed fuel demand. Rivals BP Plc, Royal Dutch Shell and Total have slashed up to $45 billion in the combined value of their oil and gas properties. Meanwhile, Exxon’s 2019 plan to raise $15 billion by 2021 through asset sales has gotten off to a slow start, fizzling this year due to lackluster demand from potential buyers.

The latest cost cuts are needed to preserve the company’s nearly $15 billion annual payout to shareholders in the face of rising losses, the people said. Exxon will not generate enough cash from production operations to cover this year’s dividend, analysts have said. It borrowed $18 billion earlier this year to bolster cash.