Credit Suisse updates on Exxon Mobil (XOM -1.0%) after meeting with management.
On dividends: “Dividend preservation remains the top priority as XOM is committed to keep paying dividend through the current commodity down cycle. XOM is willing to pull multiple levers to ensure dividend safety without adding materially to its gross debt. XOM expects 2020 capex at $23Bn vs. original guidance of $33B.”
On upstream: “XOM expects to end 2020 with only 10-15 rigs running in the Permian vs. 30 at end of 2Q 2020. But given the number of DUCs, it still expects to grow YoY production in 2020 and 2021. Like Guyana, XOM is committed to Permian development program but given the shorter cycle nature of the shale development, the pace as been altered in the Permian vs. Guyana where there was no slowdown despite a weaker commodity price environment. In Canada, Kearl is fully back up and running which is positive for both XOM and IMO. XOM has the pipe capacity to move heavy crude produced at Kearl all the way to Gulf Coast, where they can use it in their refineries, sell to 3rd parties or even export it internationally.”
On demand: “While its European peers are more bearish on oil demand recovery and are diversifying away from oil and gas, XOM believes demand will not only recover but continue to grow to satisfy higher energy needs of developing countries. XOM tracks a lot of economic data and trends, and has not seen anything until now which changes their view of long term-demand fundamentals of Oil and Gas business.”
Credit Suisse keeps a Neutral rating on XOM and price target of $47.