Exxon Mobil Corp. on Friday posted its first quarterly loss in three decades on plunging oil demand and collapsing prices, reporting a US$610-million quarterly deficit after a nearly US$3-billion inventory writedown.
Global fuel demand has tumbled by a third on coronavirus-related lockdowns and business shutdowns. Oil giants largely have reported losses on weaker margins and writedowns from an oil glut that has sent prices to historic lows.
All of Exxon’s businesses posted lower year-over-year profits or wider losses on declining prices and margins.
Despite a deep spending cut and its first quarterly loss since 1988, the company believes a growing global middle will ultimately lift demand.
“The long-term fundamentals that drive our business have not changed,” said chief executive officer Darren Woods. However, he conceded, “It’s going to be a very challenging summer.”
Exxon’s results echoed those of rivals Royal Dutch Shell and BP, though Chevron reported a first-quarter profit gain due to asset sales.
The largest oil companies have largely sought to protect investor payouts by increasing borrowing or cutting expenses. Exxon, BP, and Chevron maintained their quarterly payouts while Shell cut its dividend for the first time since the Second World War.
Exxon has cut its project spending this year by US$10-billion and expects to reduce oil and gas output by 400,000 barrel per day in line with rivals. Chevron also plans to cut as much as 300,000 bpd this month and up to 400,000 in June.
Exxon posted a loss of US$610-million, or 14 cents per share, in the quarter, compared with a profit of US$2.35-billion, or 55 cents per share, a year earlier.
Earnings from oil and gas production fell 91 per cent from a year ago on weak oil prices. Exxon’s volumes were higher, with its U.S. shale production up 56 per cent from a year ago.
Its refining business swung to a US$611-million operating loss on weak demand and inventory charges. Lower costs and gains from trading helped limit losses, the company said.
The chemical unit posted a profit of US$144-million, down 75 per cent from a year ago but up from a fourth-quarter loss.
“The downstream in particular came in ahead of our expectations,” wrote RBC Capital Markets analyst Biraj Borkhataria. The chemicals unit “was a better result than any time in 2019,” he added.
Exxon’s shares were down 3 per cent at US$45.03 in morning trading. The stock is down 34 per cent this year.
Exxon’s production rose slightly to about 4 million barrels of oil equivalent per day (boepd) from 3.98 million boepd. A goal of producing 750,000 bpd from Guyana discoveries by 2025 would be pushed back a year, Exxon said.
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