Oil major ExxonMobil, which also makes products like slideway oil under the Mobil brand, has announced it is pulling back on its operations in the Permian Basin amid the current trading conditions.
Oil prices have fallen by about a quarter this year as demand failed to keep up with supply. Oversupply was already an issue as economies around the world showed signs of slowing, but this has been further emphasised by the coronavirus outbreak, which has affected Chinese manufacturing and consequently its demand for oil products.
In response, ExxonMobil plans to operate 20% fewer rigs in the prolific Permian Basin of Texas and New Mexico over the year. This will likely come about by cutting back on well drilling and completion. Woods also said that ExxonMobil’s capital expenditure this year will probably be closer to the lower end of its estimated range.
Speaking at the New York Stock Exchange, Darren Woods, the CEO of ExxonMobil, said:
“We all know today, oversupply, driven by industry investments in some of these growth markets, have exceeded demand, and we’ve got a very challenging short-term margin environment which is now being compounded by the growing economic impact of the coronavirus that we’re seeing around the world.”
He added that despite the short-term uncertainty in the markets at present, the company remained focused on the much clearer long-term outlook. Despite the slowdown this year, the company said it still plans to be producing a million barrels per day from its Permian operations by 2024.