Exxon tries to put the worst behind it with $20 billion impairment charge

FILE PHOTO: An Exxon sign is seen at a gas station in the Chicago suburb of Norridge, Illinois, U.S., October 27, 2016. REUTERS/Jim Young

(Reuters) – Top U.S. oil producer Exxon Mobil Corp on Monday said it would write down the value of $17 billion to $20 billion in natural gas properties, its biggest ever impairment, and slash spending next year to its lowest level in 15 years.

The oil major is reeling from the COVID-19 pandemic’s impact on energy demand and prices, and is trying to protect a rich shareholder payout that is yielding 8.6% and costs nearly $15 billion a year.

Coming impairments include much of the value of Exxon’s 2010 purchase of shale producer XTO Energy, a stock deal worth roughly $30 billion at the time. The XTO purchase thrust Exxon into the forefront of the U.S. shale boom, but was largely a bet on natural gas just before prices went on a decade-long slide.

Exxon will focus instead on Guyana, where it discovered up to 8 billion barrels of oil, offshore Brazil, and the Permian Basin oil field, the company said.

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