US supermajor ExxonMobil is preparing to take a non-cash after-tax impairment of up to $20 billion after removing certain dry gas assets from its development plan, the company said on Monday.

ExxonMobil’s removed assets include those in the Appalachian and Rocky Mountains and across the states of Oklahoma, Texas, Louisiana and Arkansas. Additionally, it said it removed assets in western Canada and Argentina.

The company said it will step up “monetisation of less strategic assets to grow the portfolio of potential divestments, including certain North American dry gas assets”, while focusing its near-term investment priorities in the US Permian basin, Brazil, and Guyana.

ExxonMobil’s recent deep-water Tanager-1 wildcat off Guyana was rated a non-commercial discovery of heavy oil, a rare disappointing result for the supermajor on its operated Stabroek block.

“Recent exploration success and reductions in development costs of strategic investments have further enhanced the value of our industry-leading investment portfolio,” chief executive Darren Woods said in a statement.

“Continued emphasis on high-grading the asset base - through exploration, divestment and prioritization of advantaged development opportunities - will improve earnings power and cash generation, and rebuild balance sheet capacity to manage future commodity price cycles while working to maintain a reliable dividend.”

ExxonMobil expects to spend between $16 billion and $19 billion in capital and exploration expenditures in 2021. That spending will be increased to $20 billion to $25 billion annually through 2025.

For the fourth quarter, Woods said the business environment is showing signs of improvement despite a resurgence in Covid-19 cases.

“Prices and margins for many of our businesses have improved from the third quarter and when coupled with continuing efforts to reduce spending and capture additional efficiencies, quarter-to-date cash flow has improved versus our plan assumptions,” he said.

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ExxonMobil preps for up to $20 billion impairment in Q4