Capturing cost-savings brought by operational efficiencies, market benefits and delivering projects on schedule and on budget are among the ways ExxonMobil Corp. (NYSE: XOM) has managed to lower capital spending by nearly 40% to $14.5 billion so far in 2016.

Plus, “we have adjusted the pace of some of those investments in order to make sure we were maximizing the value proposition given where we are in this cycle,” Jeff Woodbury, vice president of investor relations and secretary for ExxonMobil, said during the company’s third-quarter 2016 earnings call.

The capex is below guidance shared earlier this year, and spending patterns are trending between $20 billion and $21 billion for the full year, he added.

ExxonMobil is among the many oil and gas companies that have responded to challenging market conditions—the result of an oversupplied market that has outpaced demand—by cutting costs to make ends meet. But their moves to cut expenses, which have opened their eyes to new technologies and ways to work smarter, could have staying power.

“For example, by leveraging our fast-drill process and flat-time reduction initiatives, we were able to realize cumulative drilling savings of $5 billion in the last decade,” Woodbury said. “Today, these tools are delivering shorter drill times and improved performance in places like Angola, Guyana and Russia. A hallmark of our success has been the committed focus across the full value chain on technology development, not only to develop lower cost alternatives, but also to enhance integrity and reliability, improve productivity, increase product value and minimize environmental impact.”

Proprietary research in advanced seismic imaging and high-performance computing are among the technology areas being targeted by ExxonMobil, which has acquired more than 60,000 sq km of 3-D seismic data through 2016 in areas such as Eastern Canada, Guyana, Ireland, Mexico, Mozambique and South Africa. “This new seismic data will enable us to evaluate recently captured acreage and ultimately identify new potential drilling locations,” Woodbury said.

The cost savings, however, didn’t leave the company immune to the side effects of lower commodity prices. ExxonMobil reported:

  • Earnings of $2.65 billion, a 38% drop in quarterly profit from the $4.24 billion reported this time last year;
  • Upstream earnings of $620 million, down $738 million from a year ago;
  • Liquids production dropped by 120,000 barrels per day (Mbbl/d) to 2.2 MMbbl/d, mainly due to downtime in Nigeria and field declines, which offset project startup; and
  • Natural gas production up by 77 million cubic feet per day (MMcf/d) to 9.6 Bcf/d as project startups more than offset field decline and divestment impacts.
  • Capital and exploration expenses of $4.2 billion were down 45% from third-quarter 2015;

The results still beat Wall Street’s expectations as cost cuts partly offset declining crude oil prices. Reuters reported that analysts on average expected a profit of 58 cents per share, according to Thomson Reuters I/B/E/S.

“International upstream earnings reflected a solid rebound from last quarter’s level; [however,] 3Q 2016 total production of 3.81 MMboe/d] seems particularly light,” Barclays said in a note, adding the firm estimated 4.02 MMboe/d, “even when considering the variance mostly emanated from unplanned downtime in Nigeria.”

“To that end, however, unit profits came in strong—total E&P $1.8/boe vs. our $1.5/bbl estimate offset the impact of lower-than-expected production,” Barclays said.

Lower commodity prices also have impacted ExxonMobil’s reserves replacement ratio.

Fears are that some of ExxonMobil’s currently booked reserves may not qualify as proved reserves at the end of the year. These include reserves associated with the company’s Canadian oil sands, Woodbury said.

“If these price levels persist, reserves associated with end-of-field-life production or certain other liquids and natural gas operations in North America also may not qualify,” he added. “However, as you know, amounts required to be de-booked on an [U.S. Securities and Exchange Commission] basis are subject to being rebooked in the future when price levels recover or when future operating or cost efficiencies are implemented.

“We don’t expect the de-booking of proved reserves under the SEC definitions to affect the operations of these assets or to alter our outlook for future production volumes,” Woodbury said.

Velda Addison can be reached at vaddison@hartenergy.com.