Shares of ExxonMobil (NYSE:XOM) rose 5.1% on Thursday after the energy giant reaffirmed its long-term commitment to fossil fuel production, albeit with a more streamlined cost structure.
CEO Darren Woods told Exxon’s employees to expect layoffs, as low oil prices continue to plague the industry. “These are difficult times,” Woods said. “We are making tough decisions, some of which will result in friends and colleagues leaving the company.”
Job cuts could help ExxonMobil weather a coronavirus-driven industry downturn. Image source: Getty Images.
Woods did, however, note that despite the rapid growth of renewable energy sources, oil and gas is still forecasted to account for roughly 50% of the world’s energy mix in 2040, down from about 60% today. Woods says Exxon will continue to help supply this energy in the decades ahead, thanks to its immense scale, distribution network, and technological expertise.
Importantly, Exxon is on track to reach its cost reduction goals, including slashing 15% of its cash operating expenses and deferring over $10 billion in capital expenditures. Woods says the cost cuts are necessary to keep Exxon financially sound during a time when plunges in global auto sales and airline flights have led to a steep decline in oil demand.
Still, Woods is adamant that Exxon will continue to serve the vital role of supplying reliable, cost-effective energy for decades to come. “I can think of no higher purpose than helping people and communities around the world grow in prosperity and achieve their aspirations for a better life through affordable energy,” he said.