Colossal fossil ExxonMobil announced yesterday that is writing off US$17 to $20 billion in natural gas holdings in North and South America as stranded assets, on the same day that its Canadian subsidiary Imperial Oil declared that it never expects to develop gas properties in Alberta worth up to C$1.2 billion.
Later Tuesday, Exxon no doubt triggered much rending of cloth in executive suites around the world with the news that it will suspend employee bonuses this year, although its five top executives will still “share 554,400 in restricted stock awards, about the same as a year earlier,” Bloomberg reports. “The awards were valued at about US$37.5 million in total last year, but Exxon shares have tumbled about 40% since then.”
Exxon’s gas field write-off is the biggest in its modern history, the news agency states, in a post republished by the Institute for Energy Economics and Financial Analysis. Imperial “said it has reassessed the long-term development plans of its unconventional natural gas portfolio in Alberta and no longer plans to develop a ‘significant portion’ of those assets,” The Canadian Press writes.
“Exxon has been warning shareholders since October that its gas assets were at risk of significant impairment,” Bloomberg says, and has now lowered the boom on various gas properties in Appalachia, the Rocky Mountains, Oklahoma, Texas, Louisiana, Arkansas, western Canada, and Argentina. The company said it would try to find buyers for its “less strategic” assets, the news agency adds.
“The announcement comes in the waning days of a gruelling year for Chief Executive Officer Darren Woods, who’s resorted to laying off thousands of employees, curtailing retirement benefits, and cancelling ambitious growth projects,” the news agency writes. “In addition to dropping vast swaths of gas assets from the development queue, Woods is capping capital spending at US$25 billion a year through 2025, a $10 billion reduction from his pre-pandemic target.”
The New York Times notes that Exxon “has fared worse than other major oil companies during the pandemic. It was removed from the Dow Jones industrial average in August and has suffered three consecutive quarterly losses.”
Imperial, meanwhile, “said the exploration lands it is shelving haven’t been developed and aren’t producing, adding the move doesn’t include natural gas prospects that are also rich in petroleum liquids,” CP writes. “Last week, the Calgary-based company said it would lay off about 200 of its 6,000 employees across Canada as part of a cost-cutting initiative due to low oil prices, adding it has reduced the number of contractors it employs by about 450 since the start of the year.”