Bidness Etc - Exxon Mobil Trims Capital Expenditure By $4.64 Billion For FY15

Exxon's stocks were trading 1% down during trading hours today.

Exxon Mobil Corporation (NYSE: XOM) reported Wednesday that it will trim its capital expenditure by $4.64 billion for the fiscal year 2015 (FY15), joining other oil giants which are also considering slashing their spending for the current year.

However, the company intends to stick with its initial product target, which was made when crude was worth more than $100 per barrel, believing that the demand for crude will continue to rise throughout the year.

The oil giant said it will cut its capital spending 12% to $34 billion for FY15, compared to earlier estimates of $38.5 billion.

Exxon's stocks were trading 1% down during trading hours today.

WSJ reported that more than two dozens of independent oil producers have decided to slash its capital expenditure for the current fiscal year by almost $24 million, down from last year’s spending. BP Plc trimmed its spending for FY15 by 13% YoY in February.

Although, Exxon CEO Rex Tiller said that the company will not change its long-term approach to capital allocation, average capital expenditures are likely to be less than $34 billion for FY16 and FY17.

Following years of high spending on massive projects worldwide, Exxon has decided to reduce its capital spending. When crude was trading more than $100 per barrel, oil companies were striving to drill more rigs and enhance their profitability, which resulted in huge development expenses.

In past few months, oil has rallied mostly due to slashing of capital expenditure by oil producing companies, which could aid to bring the oil prices back to its initial level. In mid-February, Brent surpassed $60 for the first time in 2015

The Texas-based oil company said that commodity prices had driven its business strategy, as it plans to raise production level by 2% YoY for FY15. It will further upgrade its new project in Indonesia, Canada, and Angola in FY15. For FY 16 and FY17, it had planned to upsurge development of projects in United Arab Emirates, Russia, and Australia.

Recently in April, the company has been down on its ratings though as the company has lodged a case at the Stockholm arbitrage court against Russia due to the reason of tax dispute because of the excess of its ongoing project in Russia. as notified by the spokeswoman for Russia’s Energy Ministry. The details of this project however weren't disclosed to the media thought through press release. The company itself believes that they have overpaid profit taxes on its oil and gas project Sakhalin-1,. In this the company itself owns a stake of 30% and is seeking reimbursement of their part in this project.