Exxon Mobil Corp (XOM.N) said on Wednesday it would continue to cut spending as long as crude prices remain low, but the world’s largest publicly traded oil company added it may look at potential acquisitions in a bid to offset a dip in production.
Exxon, which has a triple-A credit rating, raised $12 billion in the debt market earlier this week, leading analysts to speculate the oil major may be gearing up for an acquisition spree.
The company said it has the financial flexibility to boost spending if the right opportunities present themselves.
But Chief Executive Officer Rex Tillerson, speaking at an analyst meeting in New York, said the company was more likely to purchase stand-alone assets than whole companies. He said he believed many companies have damaged their value by raising debt or issuing equity to deal with low oil prices.
“There’s been a fair amount of value destruction in the last year,” Tillerson said. “It’s like buying a home with a big mortgage on it. There’s not a lot of equity left there.”
Texas-based Exxon said it expects its capital spending, which has been falling since hitting a peak of $42.5 billion in 2013, to drop next year from the $23.2 billion it now plans to spend this year. It spent $31.1 billion in 2015.
Early last year, Exxon said its average annual spending would be around $34 billion over the next several years.
The company also said on Wednesday that it was on track to start up 10 new oil and gas projects through the end of next year, which would add 450,000 barrels of oil equivalent per day (boed) to its production capacity.
But it expects long-term production of between 4.0 million and 4.2 million boed through 2020, compared to 4.25 million boed in the last quarter of 2015. That outlook is based on a Brent oil price LCOc1 of $40 to $80 a barrel, Exxon said. Brent oil currently trades at just under $37 a barrel.
Oil prices have fallen some 70 percent since mid-2014, prompting major companies to slash budgets for expensive projects designed to bring hard-to-find new discoveries online.
Exxon’s oil and gas production rose 3.2 percent in 2015, as its downstream refining unit provided some insulation against the impact of falling oil prices on its upstream exploration and production unit.
Tillerson, who is expected to retire by 2017, also said Exxon was committed to retaining and growing its dividend.