Exxon marks the spot

2 February 2016 By Kevin Allison

The U.S. energy titan axed 2016 capex plans by more than expected and halted share buybacks, even as Q4 profit beat forecasts. It suggests Exxon is girding for a prolonged slump. The more the industry slashes, however, the greater the odds of an eventual rally in crude prices.

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Exxon Mobil on Feb. 2 said it planned to invest $23.2 billion in its operations in 2016, 25 percent less than last year. The U.S. oil and gas company also said it would halt its share buyback as it reported a 58 percent drop in net profit for the fourth quarter of 2015.

The price of Brent fell 5 percent in Feb. 2 trading, while U.S. benchmark crude slipped a similar amount to below $30 a barrel amid concerns that OPEC producers and Russia may not be able to agree to a deal to curb oversupply by limiting oil production.

Exxon’s shares fell 3 percent in morning trading after its earnings announcement.

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