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Oil giant ExxonMobil reported better than expected first quarter earnings Friday. However plunging oil demand and collapsing prices saw a nearly $3 billion inventory writedown and $XOM's first quarterly loss in 32 years. Rival Chevron also reported. There are no plans to cut the dividend.

Exxon Sign

Exxon has cut this year’s project spending by $10 billion and expects to reduce oil and gas output by 400,000 barrel per day in line with rivals.

ExxonMobil Inc. (NYSE: $XOM) Reported Earnings Before Open Friday

$0.53 Beat $0.04 EPS and $56.16B Beat $53.18 billion revenue forecast

Earnings

Exxon Mobil Corp. (NYSE: XOM) reported Q1 earnings on Friday, reporting a $610 million first-quarter loss after a nearly $2.9 billion inventory writedown. Adjusted earnings fell to 53 cents a share, excluding the massive charge of 67 cents a share, to account for lower inventory values from cheaper oil prices. Revenue fell nearly 12% to $56.16 billion. Analysts had expected Exxon earnings plunging 93% to 4 cents with revenue down 15% to $53.8 billion. The loss of 14 cents per share, in the quarter, compared with a profit of $2.35 billion or 55 cents per share, a year earlier.

All of Exxon’s businesses posted lower profits or wider losses except or chemicals, where low oil and gas prices lifted earnings.

 

Exxon Mobil Corporation NYSE: $XOM

Market Reaction - Market Close May 1 $43.14 USD −3.25 (-7.01%)

Highlights

“Covid-19 has significantly impacted near-term demand, resulting in oversupplied markets and unprecedented pressure on commodity prices and margins,” said Exxon chief executive Darren Woods.”

  • Total oil-equivalent production of 4.05 million barrels per day was up 1.6% from a year ago but flat from Q4.
  • Permian Basin production jumped 56% from a year ago and 20% from Q4.
  • Cash flow from operations was $6.3 billion.
  • Guyana resources lso continute.
  • Liquid production increased to 2.480 million barrels per day (MMBbls/D) from 2.327 MMBbls/D in the prior-year quarter.
  • Production from the United States, Canada and Asia rose significantly, it declined in Europe and Africa.
  • Natural gas production was 9.396 billion cubic feet per day (Bcf/d), down from 9.924 Bcf/d a year ago, due to lower output from Europe.
  •  In the United States, the company recorded crude price realization of $42.82 per barrel, lower than the year-ago quarter’s $53.30. The same metric for non-U.S. operations declined to $41.96 per barrel from the year-ago $57.12.
  • Natural gas prices in the United States were recorded at $1.69 per thousand cubic feet (Kcf), below the year-ago quarter’s $2.93. Similarly, in the Non-U.S. section, the metric fell to $5.60 per Kcf from $7.18 in first-quarter 2019.

ExxonMobil Q1 2020 Earnings

In upstream,

Quarterly earnings of $536 million plunged from $2.9 billion a year ago, primarily due to lower oil and gas price realizations. The downside was offset partially by higher liquid production volumes.

Operations in the United States recorded a loss of $704 million against a profit of $96 million in the March quarter of 2019. Moreover, the company reported earnings of $1.2 billion from Non-U.S. operations, drastically down from the year-ago quarter’s $2.8 billion.

In downstream,

The segment recorded a loss of $611 million, wider than the year-ago loss of $256 million. The underperformance can be attributed to lower industry refining margin from operations in America and outside.

Notably, ExxonMobil's refinery throughput averaged 4.1 MMBbls/D, higher than the year-earlier level of 3.9 MMBbls/D.

In Chemical

Recorded $144-million profit, down from $518 million in the year-ago quarter due to the decline in margin and volumes from non U.S. operations.

Financials

During the quarter under review, ExxonMobil generated cash flow of $7.3 billion from operations and asset divestments, up from $6.2 billion a year ago.

The company's capital and exploration spending rose 8% year over year to $7.1 billion.

At the end of first-quarter 2020, total cash and cash equivalents were $11.4 billion, and debt amounted to $59.6 billion.

Outlook

Looking forward, however, Exxon plans to cut production by around 400,000 oil-equivalent barrels per day due to “economic shut-ins and market curtailments as [a] result of COVID-19.”

Exxon has said the company has no plans to cut its dividend, and on Wednesday, ahead of the earnings release, the company said it would maintain its dividend at 87 cents per share.

“Our company remains strong and we will manage through the current market downturn as we have for decades,” said Woods. “Today’s circumstances are certainly unique, but our people have the experience, our business has the scale, and we have the financial strength to see us through and emerge stronger than ever,” he added.

 

ExxonMobil Huge Liza Field Acerage in Guyana

ExxonMobil said that oil production started from the Liza field offshore Guyana, less than five years after the first discovery of hydrocarbons, well ahead of the industry average. Gross production from the Liza phase 1 development, located in the Stabroek block, is expected to reach a capacity of 120,000 gross barrels of oil per day in the coming months.

$XOM made a final investment decision during 2Q17 to proceed with the Liza field development located offshore Guyana, where production is expected to start in 2020. The company expects Liza to add up to 120,000 barrels of oil per day to $XOM's production.

Liza HESS EXXON

 

Source: ExxonMobil, Alpha Street

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