As oil prices continue to hover near 4 year lows ExxonMobil CEO Rex Tillerson said Thursday his company can weather prices dropping to as low as $40 per barrel.
Tillerson told CNBC that ExxonMobil can be “successful” even if prices continue to fall because most of the company’s largest projects are long term investments that have been tested against a wide spectrum of prices.
“All of the investment decisions we take have been tested across a range of pricing that accommodates these types of price swings,” Tillerson said.
ExxonMobil tests its investments across price points ranging from $40 to $120 per barrel.
“Well, it’s not the first time we’ve been through a price correction. For a lot of our younger people, this will be their first experience to go through a commodity price correction, but it really means just a return to fundamentals for us,” Tillerson said.
Lower prices will also force companies to focus on cash management and core business areas, he said.
“It’s important about watching your cash, watching your investment decisions, being very disciplined about everything, and then looking for opportunities that may present themselves in an environment like this,” Tillerson said.
Tillerson said weak prices may “sort out” the market by pushing out smaller unconventional drillers and bringing output in line with demand.
“There’s been a lot of people entering this space. Some are good. Some are not as good. There will be some sorting out of that,” Tillerson said.