Exxon Mobil Plans to deal with Lower Price Environment

Exxon Mobil Plans to deal with Depressed Price Environment

Over the last six months, Crude oil prices have come down drastically, leaving the management of most of the energy companies in tough situation. The trouble for energy majors is likely to continue as the energy market experts suggest that oil prices could remain in $40-50 per barrel range during the year. People across the world are enjoying the low prices of oil, a lot of oil companies have been waiting to ride out the current period. Most of the companies have been held hostage by low prices of oil as it has impacted their margins.

The energy companies are waiting for a time when supplies will drop to a manageable level and demand for oil improves. According to energy market experts, the companies might have to wait for a longer time as inventories in the U.S. have touched multi-year high.

Exxon Mobil Corp., an American multinational oil and gas corporation headquartered in Irving, is considering reduction in capital expenditure and cost cutting measures to improve profitability. Exxon has a solid strategy to deal with the low petroleum price environment.

According to the strategy of Exxon Mobil, it will cut back on its capital expenditures. In the current year, the company has projected to spend just $34 billion. It means that the company will reduce 12% budget compared to last year. Adding to that, the company has decided to focus on upstream spending and not on downstream spending. It means that the company is going to negotiate a lot of oil service costs. It could create problems for oil giants such as Halliburton and Schlumberger.

The company is also planning to hold back on acquisitions for the current year. As per some analysts, Exxon will remain focused on shale growth. They said that in such areas, the company has a lot of operational efficiencies.