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ExxonMobil (XOM) Outlines Business Plan: Digging Into Details

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Zacks Equity Research
·3 min read
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Exxon Mobil Corporation XOM recently announced its priority to allocate near-term capital spending on key assets that will secure significant future value.

The leading integrated energy firm is planning for $16 to $19 billion in capital and exploration investments in 2021. The company also set a target for annual investments at $20 billion to $25 billion from 2022 to 2025. The prime assets on which the investments will be primarily focused on comprise  the most prolific Permian basin in the United States, offshore oil and gas resources in Brazil and Guyana, and several chemicals projects.    

Along with strengthening its portfolio value, the energy giant is focused on divesting non-core assets that will not be adding significant value to the company. The list of underperforming assets includes several dry gas resources in the United States, western Canada and Argentina. With the removal of those assets from its development plans, the company expects to witness a non-cash, after-tax impairment charge of $17 billion to $20 billion in the December quarter. This marks the company’s largest-ever impairment.

Hence, by strengthening its portfolio of asset base, the company expects to generate more returns for shareholders while further enhancing balance sheet strength. Thus, ExxonMobil will be able to mitigate oil price volatility stronger than before and protect dividend payments.

It is to be noted that the coronavirus pandemic has dealt a heavy blow to global energy businesses. To survive the pandemic, ExxonMobil has chalked out cost-reduction initiatives which include targets to exceed its plans of slashing 2020 capital spending by 30% and cash operating expenses by 15%. The company also intends to cut headcount across the world by 15% by 2021-end. Importantly, the integrated player now expects to double earnings by 2027 instead of 2025, which was its prior target, as the company has reviewed its forward business plans in the wake of the pandemic-induced low commodity pricing scenario.

Exxon Mobil Corporation Price

 

Exxon Mobil Corporation Price
Exxon Mobil Corporation Price

Exxon Mobil Corporation price | Exxon Mobil Corporation Quote

Headquartered in Irving, TX, ExxonMobil currently carries a Zacks Rank #4 (Sell). Meanwhile, a few better-ranked players in the energy space include DCP Midstream, LP DCP, HighPoint Resources Corporation HPR and Summit Midstream Partners, LP SMLP. All the stocks sport a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

DCP Midstream has seen upward estimate revisions for 2020 bottom line in the past 30 days.

HighPoint is likely to see earnings growth of 167.5% in 2020.

Summit Midstream has seen upward earnings estimate revisions for 2020 in the past 30 days.

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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
 
Summit Midstream Partners, LP (SMLP) : Free Stock Analysis Report
 
DCP Midstream Partners, LP (DCP) : Free Stock Analysis Report
 
HIGHPOINT RESOURCES CORP (HPR) : Free Stock Analysis Report
 
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