With oil trading at prices that are uneconomical even for the world's biggest majors, on Tuesday morning ExxonMobil (XOM) announced it cut its 2020 Capex by 30% and cash Opex by 15% as the CEO said he expects a record 25-30% demand drop this year.

The company said that the largest share of Capex reductions, or roughly 30% of total, would be in the Permian Basin. As a result of the spending cuts, the company will a production hit of 100,000 to 150,000 barrels/day from the Permian Basin in 2021 due to its spending reductions, CEO Darren Woods says on call with reporters, adding that in 2020 the production cut would be a modest reduction of only 15,000 barrels, which will hardly be enough an OPEC+ demanding US shale producers join the global production cuts now not in one year.

Among the other Exxon announcements:

• Expects to meet projected investments of USD 20bln on US Gulf Coast manufacturing facilities
• Expects to reach proposed US investments of USD 50bln over 5yrs announced in 2018
• Mozambique project, expected later this year, has been postponed
• Current operations onboard Liza Destiny production vessel are undisturbed
• Capital allocation priorities remain unchanged
• Long-term fundamentals that underpin Co's business plans are unchanged
• Globally, the company sees industry refinery output declining in-line with demand and storage available

We’re in a “capital-intensive commodity business that’s used to ups and downs in price cycles. However, I have to say we haven’t seen anything like what we’re experiencing today" the CEO said, concluding ominously that "these are definitely challenging times for all of us."

Exxon's stock price rose by 7% on the news, although it remains about 40% below levels it traded at at the start of the year. The company's dividend yield remains a above 8% - a staggering number for what was not that long ago one of the world's largest companies.

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