Exxon cracking down on employee travel after profit collapse
Exxon Mobil Corp. has been scrutinizing employee-travel budgets since the largest North American oil explorer posted its worst quarterly profit in almost four years, according to people with knowledge of the matter.
Auditing teams have fanned out to some divisions to analyze travel requests involving industry conferences, according to the people, who asked not to be identified because they aren’t authorized to talk publicly. An Exxon spokesman didn’t respond to a request for comment.
The austerity measures are unusual for Irving, Texas-based Exxon, one of the few major explorers to avoid job or dividend cuts during the 2014-16 oil slump. The restrictions may also signal intensifying concern among Exxon leadership about the prospects for a recovery as China’s coronavirus outbreak slams global energy demand.
Although Exxon has thus far shielded its sacrosanct dividend from the oil-price slump, chinks began to appear in the crude giant’s armor as far back as 2016, when S&P Global Inc. revoked the company’s gold-plated credit rating for the first time since the Great Depression. Although Exxon has steadily raised annual dividends, cash flow hasn’t kept pace, forcing the company to use borrowed money and asset sales to fund the payouts.
Exxon has been punished by investors since disclosing fourth-quarter results on Jan. 31 and warning that conditions in its chemical business will remain “challenging” for the rest of this year. Since that report, the company shed about $20 billion in market value.
The company’s stock rose 1.3% to $60.71 at 9:46 a.m. in New York.
U.S. oil and gas explorers large and small are straining under the dual pressures of weak commodity prices and investor demands for richer returns. In January, Chesapeake Energy Corp. terminated a deferred-compensation plan as part of broader cost-cutting efforts, just weeks after warning it may go bust. Meanwhile, Oasis Petroleum Inc. has cut executive salaries and incentive payouts.
Apache Corp., Halliburton Co. and Pioneer Natural Resources Co. have also made deep cost cuts as the sector’s outlook has darkened.
(Updates with share price in fourth paragraph)
–With assistance from Kevin Crowley.
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