Exxon is planning to cut jobs and spending, in a hail mary to preserve its dividend, according to anonymous Reuters sources.
Exxon spokesman Casey Norton, however, has denied that the oil company has plans to cut jobs or furlough employees through its annual employee reviews, although Norton did say that Exxon was “continually monitoring market conditions and our deep portfolio has flexibility to adjust our plans.”
Exxon this week is expected to join many other players in the oil industry in reporting a loss for the quarter. Refinitiv Eikon data is estimating a loss of $2.63 billion.
Already, Exxon has cut a third of its spending budget for this year as the pandemic took hold in April, complete with lockdowns that severely restricted movements in the world’s top oil-consuming nation.
The dividend that Exxon is so desperately trying to maintain will cost it $15 billion this year, Exxon sources said, at a time when belts are tightening everywhere.
But Exxon is looking to cut costs elsewhere, according to the sources.
Reuters sources did not elaborate on how deep the cuts to either the spending or to the jobs would be, but analysts have predicted that as is, Exxon will not generate enough cash from operations to support that $15 billion dividend, and it has already borrowed $18 billion this year.
Brent prices have fallen sharply this year, from nearly $69 per barrel at the beginning of January to $20 in April and $43 per barrel now.
Most analysts have said for months that Exxon’s plans to maintain its dividends in the face of the demand destruction and supply glut are unrealistic, and that changes will need to be made, either this year or next, with its market cap falling by half this year.
Exxon was recently bumped out of its second-most valuable energy company in the world by Reliance Industries.