Exxon Mobil ‘very close’ to disclosing US, Canada job cuts, says CEO
Exxon Mobil Corp is “very close” to completing its workforce appraisals in the United States and Canada and expects to unveil job cuts, its chief executive told employees in an email on Wednesday. The second-largest US oil company by market value lost nearly $1.7 billion in the first six months and analysts forecast a third-quarter $1.17 billion loss, according to IBES data from Refinitiv. The job cuts are part of a plan unveiled this spring to redesign how Exxon works and to increase competitiveness, CEO Darren Woods said in an email to its nearly 75,000-person workforce. Exxon has exceeded a target of reducing operating expenses by $1 billion and capital budget spending by $10 billion, he wrote. But the COVID-19 pandemic has cut oil demand by about 20%, he said, delivering a “devastating impact” on the oil business. Woods told employees that “we are very close” to completing the jobs review and that they could expect details soon after the company’s board of directors is briefed. “I wish I could say we were finished, but we are not. We still have some significant headwinds, more work to do and, unfortunately, further reductions are necessary,” he said in the email. Exxon was slower than rivals to react to this year’s oil price decline and borrowed $23 billion to shore up a balance sheet strained by the losses and a nearly $15 billion annual dividend payment to shareholders. Royal Dutch Shell and BP have outlined up to 15% workforce cuts while Chevron has asked employees to reapply for their jobs. Woods said the demand loss is five times the decline of the 2008 financial crisis, but “industry under-investment today will increase the need for our products in the near future.” All oil companies face the same loss of demand, but Exxon has the burden of promising to keep its huge dividend without adding new debt, said Raymond James analyst Pavel Molchanov. US oil prices must rise another $10 a barrel to cover the payout without borrowing, he estimates. “If management has to walk back their pledge” not to issue new debt to protect the dividend, “it would damage credibility,” Molchanov said. Exxon’s dividend yield, the percent of the share price paid annually to holders, was 10.3%, the largest among major oil companies and another sign of Exxon’s weak finances. Its shares fell 1.6% to $33.14 on Wednesday as oil prices declined on worries that the COVID-19 infections are on the rise globally. The stock is trading near a 18-year low.
ONGC wins 7 oil blocks, OIL 4 in latest bid round
State-owned Oil and Natural Gas Corp (ONGC) has won seven out of the 11 oil and gas exploration blocks offered for bidding in the latest licensing round, upstream regulator Directorate General of Hydrocarbons (DGH) said Thursday. Oil India Ltd (OIL) won the remaining four blocks, it said. The government had offered 11 blocks for exploration and production of oil and gas in the fifth bid round under the Open Acreage Licensing Policy (OLAP). A total of 12 bids — seven bids by Oil and Natural Gas Corp (ONGC) and four by Oil India Ltd (OIL) — were received for the 11 blocks on offer at the close of bidding on June 30. Invenire Petrodyne Ltd was the only private bidder for one block. While ONGC was the sole bidder for six blocks, OIL was the lone bidder in all the four blocks it bid for. ONGC won all six blocks where it was the sole bidder and also the one block where Invenire Petrodyne had bid. The previous bid round, OALP-IV, too had seen just eight bids coming in for seven blocks on offer. ONGC had walked away with all the seven oil and gas blocks on offer. Prior to OALP-V, the government had awarded 94 blocks in four OALP bid rounds in the last two and a half years. These 94 blocks cover an exploratory area of about 1,36,800 square kilometers over 16 Indian sedimentary basins. In the latest bid round, about 19,800 sq km of the area was offered for bidding, according to DGH. OALP-IV was the first round on revamped terms approved in February 2019. Unlike previous rounds, where blocks were awarded to companies offering a maximum share of oil and gas to the government, blocks in little or unexplored Category-II and III basins are now awarded to companies offering to do maximum exploration programme. The 11 blocks under OALP-V are spread across eight sedimentary basins and include eight on land blocks (six in Category-I basin and one each in Category II and III basins), two shallow-water blocks (one each in Category-I and II basins) and one ultra-deepwater block (Category-I basin). At the time of the launch of OALP-V, DGH had stated that the round is expected to “generate immediate exploration work commitment of around USD 400-450 million”. “An area of 1,36,800 sq km has already been awarded under OALP bid round I, II, III, and IV. These OALP bid round-V blocks would add a further 19,800 sq km. Overall exploration acreage of India would then increase to 2,36,600 sq km,” it had said at that time. Of the 94 blocks awarded in the first four rounds of OALP, Vedanta has won the maximum at 51. Oil India Ltd has got 21 blocks and ONGC another 17. After OALP-V, ONGC’s tally has gone up to 24 and that of OIL to 25. Under OALP, companies are allowed to carve out areas they want to explore oil and gas in. Companies can put in an expression of interest (EoI) for any area throughout the year, but such interests are accumulated thrice in a year. The areas sought are then put on auction.
Fuel prices stay static, petrol ends month without revision
Petrol completed a month without revision in its retail prices as oil marketing companies (OMC) decided against changing its pump price on Thursday as international product market remained subdued while crude prices remained static. Along with petrol, oil companies also kept the diesel prices unchanged even though the product has got back on demand cycle this month. With this, Petrol prices have now been unchanged for 30 days at a stretch while diesel prices were the same for the 20 consecutive days. Price of petrol in the national capital stood at Rs 81.06 per litre. In Mumbai, Chennai and Kolkata, the fuel was sold for Rs 87.74, Rs 84.14 and Rs 82.59 per litre, respectively. Diesel prices in Delhi, Mumbai, Chennai and Kolkata continues to be at at Rs 70.46, Rs 76.86, Rs 75.95 and Rs 73.99, respectively. Oil sector experts said that with global oil prices under pressure from slowing demand in the second wave of Covid-19 pandemic sweeping several western countries, crude price could fall in coming days. If this holds on for a week or so, there could be positive gains for auto fuel consumers. Global crude prices are holding close to $42 a barrel now. It has been hovering between $40-42 a barrel for over a month now. But with lower oil demand and rising inventory, there is fear among oil producing companies that crude prices may start falling again.