Exxon’s Global Empire Falls; Resizing its Staff and Projects

In an exclusive report by Reuters, the leading American oil and gas company Exxon Mobil Corp. (Exxon) is currently facing a heavy blow of its financial position as the company’s revenue had sharply declined due to the coronavirus impact. With these prevailing challenges, experts believed that the oil giant would be resorting plans to cut its existing workforce and put a halt to several projects, which were scheduled to be implemented in next few years.

Exxon, also known for creating its global empire in the realm of oil industry, has been considered to be one of the world’s finest and most valuable companies for the 20th Century as it has succeeded in a grand expansion of its business operations across the globe. However, investors are worried since Exxon’s ability to finance global expansion is no longer assured, considering the current trend of its market performance. As a result of its poor performance during the COVID-19 pandemic, the company’s ranking has been dropped out in the Dow Jones index of top U.S. industrial companies recently.

Rising Debts

According to a Reuters tally, Texas-based giant is facing a shortfall of about $48 billion through 2021 since the outstanding debt of the company has increased significantly due to the rising non-performance operations. The company’s deficit of $48 billion, as Wall Street estimated, was calculated on the basis of the existing cash from operations, commitments to shareholder payouts, and costs for the massive expansion program Exxon had previously planned.

Chief Executive Officer of Exxon, Darren Woods had raised $23.19 billion this year to strengthen balance sheet of the company, which was nearly the half of its existing debt. According to Refinitiv, the company recorded in July about its first back-to-back quarterly losses ever and witnessed a full-year loss of $1.86 billion this year, excluding asset sales or write downs. As Reuters reported, “the company’s stock price closed Friday at $39.08, off 56% since Woods became CEO.”

Since the beginning of 2020, the global oil prices have crashed and dipped nearly 35% due to the emergency lockdown and restriction of travel worldwide, caused by the spread of virus outbreak. With the harsh pandemic impact on the global oil industry, the world’s leading companies such as BP, Royal Dutch Shell, and Total and Repsol had undergone a depreciation of their market value. Exxon has not yet declared its current value evaluation.

Restructuring its Operations and Projects

Woods entered the company in January 2017 with an array of visions to solve the prevailing challenges that occurred during the last decade and set off his long-term vision by betting big on the exploration of US shale oilfields, pipelines and global refining, and plastics. However, Woods’ plan to spend at least $30 billion a year through 2025 to revive production and earnings by expanding in oil processing, chemicals, and production has been completely shattered due to the unprecedented outbreak of the pandemic.

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According to ScotiaBank and RBC Capital Markets, the company’s project outlays of the next year could drop to between $10.4 billion and $15 billion, which would be half of the original outlook. The spokesman Casey Norton stated, the review of projects aimed to “maximize efficiency and capture additional cost savings to put us in the strongest position.”

Senior vice president, Neil Chapman said in July that the company had plans to reduce the number of drilling rigs to 15 or fewer, from 55 early this year as a part of the company’s pullback policy. Meanwhile, experts suggested that the decline of projects would push thousands out of the company and could take away employees’ benefit schemes such as lavish retirement benefits of employees staying 30 years in the company on average.