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Oil giant ExxonMobil reported better than expected third quarter earnings Friday with its third quarterly loss in a row. The Covid pandemic has caused plunging oil demand within a supply glut but Exxon said seeing "early stages of demand recovery.” Q1 was $XOM's first quarterly loss in 32 years.

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

($0.18) Beat ($0.25) EPS and $32.61B Missed $38.157 billion revenue forecast

Earnings

Exxon Mobil Corp. (NYSE: XOM) reported Q3 earnings on Friday, the oil giant the company lost $680 million, although Exxon said results improved on a quarter-over-quarter basis thanks to “early stages of demand recovery.” On an adjusted basis, Exxon lost 18 cents per share during the quarter while generating $46.2 billion in revenue beating an expected a 25 cent loss per share and $46.01 billion in revenue, according to estimates from Refinitiv.

A year earlier, the company earned 75 cents per share on $65.05 billion in revenue. During the second quarter of 2020, Exxon lost 70 cents per share on an adjusted basis, while revenue came in at $32.61 billion.;

 

Exxon Mobil Corporation NYSE: $XOM

Market Reaction Premarket $32.35 ▼ 0.62 (-1.88%)

Highlights

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

Segments

Upstream 

Quarterly loss of $383 million against a profit of $2,168 million a year ago. The downside was owing to lower oil-equivalent production volumes and commodity prices. Operations in the United States recorded a loss of $681 million against a profit of $37 million in the September quarter of 2019. Moreover, the company reported profits of $298 million from non-U.S. operations, representing a deterioration from $2,131 million in the year-ago quarter.

Production:

  • Total production averaged 3.672 million barrels of oil-equivalent per day (MMBoE/D), lower than 3.899 MMBoE/D a year ago, reflecting coronavirus-induced drop in fuel demand and curtailment in volumes as mandated by the government.
  • Liquid production decreased to 2.286 million barrels per day (MMBbls/D) from 2.392 MMBbls/D in the prior-year quarter.
  • Production from Europe, Africa and Asia declined significantly, it increased in Canada and United States.
  • Natural gas production was 8.316 billion cubic feet per day (Bcf/d), down from 9.045 Bcf/d a year ago due to lower output from Europe and United States.

Price Realization:

Crude: In the United States, the company recorded crude price realization of $36.80 per barrel, lower than the year-ago quarter’s $54.51. The same metric for non-U.S. operations declined to $38.30 per barrel from the year-ago $55.92. 

Natural gas: Prices in the United States were recorded at $1.62 per thousand cubic feet (Kcf), below the year-ago quarter’s $2.03. Similarly, in the non-U.S. section, the metric fell to $3.41 per Kcf from $5.81 in third-quarter 2019.

Downstream

Recorded a loss of $231 million against the year-ago profit of $1.2 billion, primarily owing to lower margins in both U.S. and non-U.S. operations since market demand was weak. This was offset partially by reduction in expenses. Notably, ExxonMobil's refinery throughput averaged 3.8 MMBbls/D, lower than the year-earlier level of 4.1 MMBbls/D.

Chemical

This unit recorded $661-million profit, up from $241 million in the year-ago quarter on an increase in margin from U.S. operations.

XOM Earnings Q3 20

Financials

During the quarter under review, ExxonMobil generated cash flow of $4.5 billion from operations and asset divestments, substantially down from $9.5 billion a year ago. The company's capital and exploration spending declined 46.5% year over year to $4.1 billion. At the end of third-quarter 2020, total cash and cash equivalents were $8.8 billion and debt amounted to $68.8 billion. Guidance The energy giant expects capital program for 2021 at $16 billion to $19 billion, below this year’s target of $23 billion.

Capital Expenditure

Exxon previously announced a reduction in its capital spending program, from $33 billion to $23 billion and Exxon said it’s ahead of schedule due to increased efficiencies and a slower project pace, among other things. The company is targeting to spend $16 billion to $19 billion in its 2021 capital program.

Job Cuts

Exxon also said Thursday it intends to reduce its U.S. staff by around 1,900 employees, with global workforce reductions potentially rising to as much as 15%. As of the end of 2019 Exxon had a global workforce of 88,300, including 13,300 contractors.

Dividend

Exxon has repeatedly said its dividend remains a priority, and on Wednesday the company maintained its fourth-quarter dividend at 87 cents per share. However it was the first time since 1982 that the company didn’t raise its payout. The company currently yields 10.56%.

Research firm Edward Jones noted that there’s an increasing risk that Exxon will have to cut its dividend in 2021 if demand doesn’t fully recover.

Outlook

“We remain confident in our long-term strategy and the fundamentals of our business, and are taking the necessary actions to preserve value while protecting the balance sheet and dividend,” Chairman and CEO Darren Woods said. “We are on pace to achieve our 2020 cost-reduction targets and are progressing additional savings next year as we manage through this unprecedented down cycle.”

ExxonMobil Huge Liza Field Acerage in Guyana

ExxonMobil earlier in the year 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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