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Home / Business / Exxon posted second straight quarterly loss on demand, falling prices

Exxon posted second straight quarterly loss on demand, falling prices



By Jennifer Hiller

HOUSTON (Reuters) – Exxon Mobil Corp. on Friday reported a $ 1.1 billion loss in the second quarter to lower prices and prices from the COVID-1

9 pandemic, and confirmed plans to make “significant” cost cuts.

It was the first quarterly loss for the oil giant in at least 36 years, but it was small compared to rivals who have written off oil and gas holdings worth billions of dollars worth of expectations that prices will remain low. The top U.S. oil producer did not receive any depreciation during the quarter and received a 44 percent gain in stock by changing inventory estimates.

Chevron Corp., Total, Royal Dutch Shell and Eni each wrote billions of dollars in assets, while BP signaled a hit of up to $ 17.5 billion.

The COVID-19 pandemic lowered oil prices, sending Exxon oil and gas production business at a loss. Its refining businesses were hit by a drop in demand, but an improvement in inventory estimates pushed overall refining profits into black by nearly $ 1 billion.

The U.S. oil major reported a loss of $ 1.08 billion, or 26 cents a share, in the three months ended June 30, compared with a profit of $ 3.13 billion, or 73 cents a share, a year earlier. .

A regulated loss of 70 cents per share lost Wall Street valuation by 61 cents, according to Refinitiv.

Oil and gas production fell 7% from a year earlier to 3.6 million barrels per day in the quarter, as it cut output due to falling oil prices and the threat that global oil storage would fill in May.

The pandemic “significantly affected our second-quarter financial results with lower prices, margins and sales volumes,” said CEO Darren Woods.

Prior to the pandemic, Exxon pursued an ambitious spending plan to boost oil production and turn bad gains into a bet that a growing global middle class would demand more of its products.

But Woods’ plan to increase production and money by selling some assets has stalled and the company has reduced its capital spending plans for this year by 30%. Exxon is preparing for deeper spending and job cuts, according to people familiar with the issue, as it struggles to maintain an 8% shareholder dividend.

He said Friday that he had identified more potential cost reductions and was conducting an “assessment of all businesses on a country-by-country basis”.

Its manufacturing business reported a loss of nearly $ 1.7 billion as the company cut production and suffered from lower oil prices, compared to a profit of $ 3.3 billion last year.

Profits in chemicals were $ 467 million, up from $ 188 million last year, and “resilient” in a tough environment, said analyst Biraj Borkhataria of RBC Europe Limited.

But Exxon’s $ 1.5 billion cash flow “compared to European counterparts this quarter, these are all smaller businesses,” Borkhataria said.

Shares fell 2.3% to $ 41.98 in pre-trading. The stock has halved since Woods took over in 2017.

(Reporting by Jennifer Hiller in Houston and Arathy S Nair in Bengaluru; Editing by Marguerita Choy and Jason Neely)


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