Exxon Corp., the world's biggest oil company, said today that it will cut 1986 capital and exploration spending by about $2.8 billion contrasted with its 1985 figure because of the traumatic plunge in crude oil prices.
The reduction from the $10.8 billion spent last year to about $8 billion planned for this year reflects the intense pressure U.S. oil companies face because of the depressed market, which has roughly halved the price of a 42-gallon barrel in the last five months to about $15.
"The 1986 spending plans for all segments of Exxon's worldwide operations have been reduced as a result of a recent reappraisal," the company said in a statement released by its New York headquarters.
The statement said expenditures for oil and gas exploration and production, which totaled $7.6 billion in 1985, will be reduced by about 26% this year to about $5.6 billion, while spending in petroleum refining and marketing is estimated to total $1.5 billion, or 21% below that of 1985.
Exxon's move came amid uncertainty over what direction oil prices will take in the near future. The 13-nation Organization of Petroleum Exporting Countries plans to convene an emergency meeting in Geneva this weekend in attempts to devise a strategy to stabilize the market.