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Oil Price Crash Led To Exxon’s Worst Loss In Its Modern History

ExxonMobil

Following the oil price and demand crash, ExxonMobil (NYSE: XOM) reported on Friday its second consecutive quarterly loss, which was the worst loss for the U.S. supermajor in its modern history.

Exxon booked a loss of US$1.1 billion for the second quarter due to the global oversupply and COVID-related demand impacts. This compares with earnings of US$3.1 billion for the same period last year.

Exxon posted an adjusted loss per share of US$0.70, larger than the US$0.61 loss per share expected by the analyst consensus in The Wall Street Journal.

Total revenues more than halved to US$32.6 billion from US$69.1 billion for the second quarter of 2019, highlighting the pain that oil companies suffered during what analysts expected to be the worst quarter for the industry.

Exxon’s production also dropped because of the demand crash in both oil and natural gas, by 7 percent to oil-equivalent production of 3.6 million barrels per day.

“The global pandemic and oversupply conditions significantly impacted our second quarter financial results with lower prices, margins, and sales volumes. We responded decisively by reducing near-term spending and continuing work to improve efficiency by leveraging recent reorganizations,” Darren Woods, chairman and chief executive officer, said.

Exxon, unlike other supermajors, hasn’t written down the value of its oil and gas assets as prices crashed. Instead, the U.S. major increased its debt.

“We have increased debt to a level we feel is appropriate to provide liquidity, given market uncertainties. Based on current projections, we do not plan to take on any additional debt,” Woods said. Related: Exxon’s Mad Dash To Save Its Dividend

Exxon, as well as the other U.S. supermajor Chevron, felt the full impact of the global glut, the oil price crash, and the demand collapse in both the upstream and downstream operations. While integrated majors can typically offset low oil prices with low-priced feedstock for the refining business, the pandemic-driven crash in demand hit refining, too.

Chevron also reported on Friday a massive loss for the second quarter. All supermajors reported dismal results for the second quarter, but European majors Shell and Total managed to avoid adjusted losses thanks to their strong oil trading businesses that cushioned the blow from the low oil prices. 

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By Tsvetana Paraskova for Oilprice.com

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