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Oil giant ExxonMobil reported worse than expected second quarter earnings Friday with its second quarterly oss in a row. The Covid pandemic caused plunging oil demand within a supply glut. Last quarter was $XOM's first quarterly loss in 32 years.

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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

($0.70) Missed ($0.61) EPS and $32.61B Missed $38.157 billion revenue forecast

Earnings

Exxon Mobil Corp. (NYSE: XOM) reported Q2 earnings on Friday, the oil giant it lost $1.1 billion amid “global oversupply and COVID-related demand impacts.” It was the oil giant’s second straight quarter of losses. XOM lost 70 cents per share on an adjusted basis, while revenue came in at $32.61 billion. In the same quarter a year ago, Exxon earned 73 cents per share, on revenue of $69.09 billion. Analysts had expected the company to report a loss of 61 cents per share for the second quarter, and revenue of $38.157 billion, according to estimates from Refinitiv.

“The global pandemic and oversupply conditions significantly impacted our second quarter financial results with lower prices, margins, and sales volumes,” said Darren Woods, Exxon CEO, in a statement.

 

Exxon Mobil Corporation NYSE: $XOM

Market Reaction Premarket -41.00 −0.87 (-2.08%)

Highlights

Covid-19 has significantly impacted near-term demand, resulting in oversupplied energy markets and unprecedented pressure on commodity prices and margins

“The global pandemic and oversupply conditions significantly impacted our second quarter financial results with lower prices, margins, and sales volumes,” said Darren Woods, Exxon CEO, in a statement.

  • Upstream business swung to a loss of $1.65 billion from income of $3.26 billion a year ago.
  • Downstream income more than doubled to $976 million as lower oil prices offset weaker margins.
  • Chemical income more than doubled to $467 million.
  • Exxon's rig count in Permian fell by 30 in Q2, with a further decline of 10-15 rigs seen by the end of the year.

XOM Earnings Q2 20

Chairman and CEO Darren Woods said he expects to meet or exceed cost-reduction targets for 2020. Debt levels have increased to provide enough liquidity with no plans to take on any additional debt.

"The company has identified significant potential for additional reductions and is undertaking a comprehensive evaluation across the businesses on a country-by-country basis," Exxon said.

Management said it does see the potential for further workforce reduction. The company will conclude a review this summer and announce the results in the fall.

Exxon Maintains Dividend

Last quarter Exxon said the company has no plans to cut its dividend, ut ahead of its quarterly results, Exxon once again reiterated that it has no plans to cut its dividend. The third quarter dividend will be 87 cents, according to a company statement released Wednesday.

Royal Dutch Shell (RDSA) cut its dividend for the first time since World War II earlier this year. Thursday, Shell reported an over 80% drop in profit Thursday and warned about uncertainty in the outlook for oil and gas demand. 

Exxon has been adamant about maintaining its payout, which currently has an 8% yield. Woods said last quarter that 70% of the oil major's investor base is made up of retail and long-term investors that expect a strong dividend. “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,” 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 

Liza HESS EXXON

Source: ExxonMobil, Alpha Street

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