ExxonMobil (NYSE: XOM) reported on Friday a surprise first-quarter loss on the back of hefty write-downs amid the oil price plunge, posting its first quarterly loss since the 1999 merger of Exxon and Mobil.
Exxon booked a loss of $610 million for the first quarter of 2020, compared to earnings of $2.4 billion for the first quarter of 2019, slipping into a quarterly loss for the first time in more than two decades, as low oil prices weighed on asset valuations.
Exxon’s loss was the result of a $2.9 billion charge from identified items, reflecting non-cash inventory valuation impacts from lower commodity prices and asset impairments.
At the beginning of April, the U.S. supermajor said it was making a ‘significant reduction’ to its capital expenditure (capex), slashing investments for 2020 by 30 percent, to around $23 billion, down from the previously announced capex of some $33 billion. Exxon will also cut its cash operating expenses by 15 percent, driven by deliberate actions to increase efficiencies and reduce costs.
Exxon’s oil-equivalent production rose by 2 percent year on year to 4 million barrels per day for Q1 2020. Permian production grew 20 percent from the fourth quarter of 2019 and jumped by 56 percent from the first quarter of 2019, Exxon said today.
Exxon, like the other U.S. supermajor Chevron and unlike some European rivals such as Shell and Equinor, will be preserving cash for the dividend.
Yesterday, Shell slashed its dividend for the first time since World War II to preserve cash and value in a highly uncertain macroeconomic environment.
Commenting on Exxon’s Q1 results, its chairman and CEO Darren Woods said:
“COVID-19 has significantly impacted near-term demand, resulting in oversupplied markets and unprecedented pressure on commodity prices and margins.”
“While we manage through these challenging times, we are not losing sight of the long-term fundamentals that drive our business,” Woods added.
“Our company remains strong and we will manage through the current market downturn as we have for decades,” Exxon’s boss said.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
- Could Brent Crude Oil Prices Ever Fall Into Negative Territory?
- Big Oil’s Dilemma: Cut Dividends Or Cut Operations
- Brent Oil Price Could Double By December