ExxonMobil and Chevron announce steep oil output cuts in the US

US oil behemoths ExxonMobil and Chevron have pledged to reduce their oil output by a combined 800,000 barrels per day (bpd) following the destruction of global fuel demand and oil prices due to the COVID-19 outbreak.

The companies announced cuts of up to 400,000 bpd in the Permian Basin – the birthplace of the US shale oil revolution – where soaring production has helped the country become the world’s top oil producer and a net exporter for the first time in decades.

Exxon and Chevron have been sidelining Permian drilling equipment since the market started to collapse in March when economies around the world introduced travel restrictions and lockdown measures to quell the spread of the pandemic.

“We would intend to bring activity back to the Permian when we see prices recover,” Chevron chief financial officer Pierre Breber said in an interview, while Exxon CEO Darren Woods said the firm will sideline 75% of its Permian drilling rigs, keeping 15 working.

Exxon made its first quarterly loss in three decades in the most recent quarter on a nearly US$3 billion inventory writedown reflecting lower margins and prices. Chevron posted a $3.6 billion profit on asset sales and improved refining results.

However, both companies will slash spending budgets by 30% this year. Chevron cut its capital spending budget to $14 billion and Exxon has set 2020 spending at $23 billion, its lowest in four years.