Page 13 - NorthAmOil Week 48 2020

NorthAmOil INVESTMENT NorthAmOil

ExxonMobil cuts capex amid

$17-20bn write-down

AMERICAS EXXONMOBIL unveiled reduced capital back and focusing on its most profitable assets
expenditure plans for the coming years this week, will help its earnings in the longer term – and
as it warned of write-downs worth $17-20bn on its statement emphasised a commitment to its
assets across the Americas in its fourth-quarter dividend, which it has sought to protect even
earnings. as rivals have slashed theirs. Indeed, it is pro-
The write-downs relate to certain dry gas jecting that it will double its earnings by 2027,
assets in Western Canada, the US and Argen- based on the same price and margin assump-
tina, the super-major said in a November 30 tions it used in its 2020 Investor Day presenta-
statement. The US assets in questions are located tion in March.
across the Appalachian Basin and Rocky Moun- “Continued emphasis on high-grading the
tain regions, as well as Oklahoma, Texas, Louisi- asset base – through exploration, divestment
ana and Arkansas. All of these assets, nationally and prioritisation of advantaged development
and internationally, will be removed from the opportunities – will improve earnings power
company’s development plan as it prioritises and cash generation, and rebuild balance sheet
“advantaged” properties with the highest poten- capacity to manage future commodity price
tial future value. cycles while working to maintain a reliable divi-
ExxonMobil identified developments in dend,” stated ExxonMobil’s chairman and CEO,
Guyana, the US’ Permian Basin, Brazil and in its Darren Woods.
chemicals business as being among these advan- ExxonMobil noted that it was on track to
taged assets. exceed announced reductions of $10bn in
The super-major will now spend $16-19bn in 2020, or 30% of capital spending and 15% of
2021, and subsequently aims to raise its capex to cash operating expenses. It said business line
$20-25bn per year in each year between 2022 and reorganisations and efficiencies that included a
2025. This is down from an original capex budget global workforce reduction of 15% by the end of
of $30-35bn per year. 2021 were key to its ongoing expense manage-
Ultimately the company hopes that scaling ment efforts.™

Maverick acquires FourPoint in all-equity deal

TEXAS- MAVERICK Natural Resources announced this “Maverick’s transformation process allows us to
OKLAHOMA week that it had acquired FourPoint Energy, the rapidly deploy technology and analytics to drive
largest producer in the Western Anadarko Basin, reductions in [general and administrative] and
spanning Oklahoma and Texas. Both Maverick lease operating expense. By renaming FourPoint
and FourPoint are majority-controlled by EIG Energy to Unbridled Resources, we are signal-
Global Energy Partners, according to a Decem- ling a shift from the traditional shale model to
ber 2 statement. Maverick’s margin-focused operational strat-
Maverick announced that following the egy,” he added.
all-equity deal, FourPoint had become a wholly “These assets add to Maverick’s substantial
owned subsidiary of Maverick and was renamed portfolio of long-lived assets,” Heinson contin-
Unbridled Resources. ued. “Further, the all-equity transaction ensures
The assets owned by what is now Unbri- the combined company will retain a healthy
dled include 50,000 barrels of oil equivalent financial position with a 2020 pro forma debt to
per day (boepd) on a net basis, with liquids Ebitda ratio of approximately 0.5x.”
comprising 47% of output, in Western Okla- Maverick noted that as part of the merger,
homa and Northern Texas. The Unbridled EIG is adjusting the board composition to sup-
position spans 700,000 acres (2,833 square port the “increased scale of the company and
km) across the core of the Granite Wash and the plans for continued growth and strategic
Cleveland Sand plays. development”.
The acquisition also included MidPoint Mid- The deal comes as a wave of consolidation
stream and Wheeler Midstream, which provide picks up pace in the US oil and gas industry,
midstream services in the Western Anadarko spurred by this year’s downturn as companies
Basin, according to the statement. consider their options for survival. All-equity
“Over the last several years, Maverick has transactions are increasingly in favour, as pro-
become a leader in reducing costs in mature ducers seek to add scale without accruing signif-
assets,” said Maverick’s CEO, Chris Heinson. icant debt to make acquisitions.™

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