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Hedge Funds Increase Bullish Bets On Oil

Hedge Funds Increase Bullish Bets On Oil

Money managers have accelerated buying…

Exxon Set For Another Loss In Q3

ExxonMobil is set to post its third straight loss in its upstream business this year, as lower oil demand continues to hurt oil companies’ profitability.

In an SEC filing on Thursday, Exxon provided a Q3 earnings considerations update of its expectations for the third-quarter results relative to the second quarter. The U.S. supermajor is reporting Q3 financials on October 30.

Exxon’s upstream business, which booked a loss of US$1.7 billion in Q2, will see its exploration and production division get a boost of between US$1.4 billion and US$1.8 billion in Q3 compared to Q2, thanks to higher crude oil and liquids prices. However, lower natural gas prices are likely to hurt the upstream business with up to US$500 million, Exxon’s filing showed.

In the downstream – which saw US$1 billion in Q2 earnings – weaker refining margins are set to weigh on the Q3 results with between US$200 million and US$600 million. Changes in the North American crude logistics differentials are also expected to weigh on the downstream with an additional US$200 million.

The Q3 earnings considerations update points to Exxon booking a loss in the quarter of around US$0.30 per share, according to analysts at Tudor, Pickering, Holt & Co, quoted by Reuters.

The Wall Street Journal analyst consensus points to Exxon posting a loss of US$0.08 per share in the third quarter.

For the second quarter, Exxon reported at the end of July 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’s total revenues more than halved to US$32.6 billion for Q2 2020 from US$69.1 billion a year earlier, highlighting the pain that oil companies suffered during one of the worst quarters for the industry ever.

By Tsvetana Paraskova for Oilprice.com

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  • Pekka Lehtikoski on October 02 2020 said:
    In the middle of all doom and gloom, there are three thinks in November which can be seen positive.
    - Crude price averaged about $30 during Q2 and about $40 for Q3. Revenues should increase somewhat proportionally. Difficult to guess the impact of the cost-savings measures. I expect Q3 to be a lot closer to breaking even for the industry as a whole. XOM earnings will be out on October 30th, the most publish those at beginning of November.
    - Winter is coming, and the low energy use season is ending.
    - Election uncertainty should be over, and speculation about this may end. Whoever is nominated has to allow the US to use energy now, not sometimes in a brave new future.

    I expect Exxon Q3 loss to be much more tolerable than two previous quarters (opinion, not fact). So far I have not heard any hints from Exxon that they would be planning dividend cuts, which seems to point that their financial position is stronger than what it appears in news. I do not think there is any real change that Exxon will go bankrupt, and I am pretty sure that the energy industry will be valuable again one day since the need for energy is going nowhere. Growing population and improving living standards in the developing world will take care of demand increase in the long run. But I am unsure how much worse it will get before getting better, nor does it take a year or five years to get there.
  • One Second on October 01 2020 said:
    So the reality is now that Tesla is consistently profitable while Exxon is consistently unprofitable.

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