In the wake of the pandemic, ExxonMobil (NYSE:XOM) has significantly lowered its expectations about oil prices for the next seven years, expecting Brent Crude to average between $50 and $55 a barrel until 2025, The Wall Street Journal reported on Wednesday, citing internal Exxon documents it had reviewed.
Exxon, unlike its peers in Europe, does not publicly disclose its internal assumptions about oil prices.
Both Exxon and the other U.S. supermajor, Chevron (NYSE:CVX), continue to see their in-house oil price forecasts as proprietary information, despite increased shareholder pressure to report that information to give shareholders insights into the price assumptions on which they base their investment decisions.
According to the internal Exxon documents from September reviewed by The Journal, last year Exxon expected Brent Crude to average $62 a barrel through 2025 and to then rise to $72 per barrel in 2026 and 2027. But this year, the supermajor sees Brent averaging up to $55 per barrel for the next five years, and $60 a barrel for 2026 and 2027.
All oil majors except Exxon have made this year significant writedowns in the value of their assets due to lower long-term oil price assumptions and the uncertainty of whether oil demand will return to pre-pandemic levels. The top executives of BP (NYSE:BP) and Shell (NYSE:RDS.A) are not ruling out the notion that the world may never return to its 'normal' pre-virus levels of consumption of around 100 million barrels per day (bpd).
Exxon’s chief executive Darren Woods told all employees last month that "the current situation is temporary - but with an uncertain path and pace of recovery."
"Even accounting for the short-term demand impact of Covid-19, the investment case is still clear," Woods said about global oil demand.
At the end of October, Exxon warned that it could write down North American natural gas assets with a carrying value of up to $30 billion U.S. as it reported its third consecutive loss this year amid low oil demand and oil prices.
By Tsvetana Paraskova for Oilprice.com
