(Bloomberg) — Exxon Mobil Corp. plans to write down the value of U.S. and South American natural gas assets by as much as $20 billion, the largest impairment in its modern history, and is slashing long-term capital spending.The company said Monday it will take a non-cash impairment charge for the current quarter after removing some gas fields from its development plan. Capital spending won’t exceed $25 billion a year through 2025, a $10 billion reduction from the company’s pre-pandemic target.The announcement comes in the waning days of a grueling year for the Texas oil giant, which has reversed course on many ambitious growth projects as the Covid-19 outbreak decimated demand for crude. Spending and job cuts are in large part aimed at defending the company’s dividend, the third-highest in the S&P 500 Index.Unlike its European peers, Exxon has so far chosen to stick with the $15 billion-a-year payout and has increased borrowing in recent months to fund it and its other capital priorities. The dividend has been increased each year for almost four decades.Optimism that vaccines will soon restore global economic growth buoyed crude prices in recent weeks but the impact of the contagion on Big Oil is likely to be longlasting. With European giants Royal Dutch Shell Plc and BP Plc accelerating the pivot to renewables and Exxon locking in drastic spending cuts, capital flows into big, traditional developments are expected to shrink in coming years.Cowen & Co. analyst Jason Gabelman detected a subtle shift in Exxon’s word choices that may herald a dramatic change in financial priorities. Whereas company executives touted Exxon’s “reliable and growing dividend” during the third-quarter earnings conference call, Monday’s statement only mentioned reliability, the analyst said in a note to clients. ‘High-Grading’“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,” Chief Executive Officer Darren Woods said in the statement.Exxon has been warning shareholders since October that its gas assets were at risk of significant impairment. Previously, the energy titan’s largest writedown was for about $3.4 billion in 2016, according to Bloomberg Intelligence.Assets removed from Exxon’s development plans include so-called dry gas resources in Appalachiaand and the Rocky Mountains, Oklahoma, Texas, Louisiana and Arkansas, as well as western Canada and Argentina, the company said. It will attempt to sell “less strategic” assets.The writedown stems from former CEO Rex Tillerson’s decision a decade ago to buy XTO Energy for $35 billion rather than spend years building an in-house shale business. At the time, the outlook for North American gas prices was bright because demand was rising faster than supply.Supply GlutInstead, fracking was a victim of its own success, unleashing so much gas that it overwhelmed demand and the infrastructure needed to handle it, resulting in a prolonged stretch of depressed prices.U.S. rival Chevron Corp. recorded an impairment of more than $5 billion on Appalachian gas a year ago, and recently agreed to sell those fields to EQT Corp. for about $735 million.(Updates with chart under third paragraph. A previous version of this story corrected the tense in the first paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.