Exxon Mobil post first quarterly loss since 1988 and Shell announces its first dividend cut since World War II

Exxon Mobil post first quarterly loss since 1988 and Shell announces its first dividend cut since World War II

Is The Era of Crude Oil Gone?

Exxon Mobil Corp on Friday posted its first quarterly loss in three decades on plunging oil demand and collapsing prices, reporting a $610 million quarterly deficit after a nearly $3 billion inventory writedown

Oil glut, lockdown and business shutdown has been the primary cause of the meltdown

Global fuel demand has tumbled by a third on coronavirus-related lockdowns and business shutdowns. Oil giants largely have reported losses on weaker margins and writedowns from an oil glut that has sent prices to historic lows.

 “The long-term fundamentals that drive our business have not changed,” said Chief Executive Officer Darren Woods. However, he conceded, “It’s going to be a very challenging summer.”

Those who took a hit as well are Royal Dutch Shell and BP exclusive of  Chevron reporting a first-quarter profit gain due to asset sales.

To protect shareholders the companies are increasing borrowing or cutting expenses. Exxon, BP, and Chevron maintained their quarterly payouts while Shell cut its dividend for the first time since World War Two.

Exxon has taken stringent measures to keep its doors open by cutting projects by $10 billion and reducing oil and gas production by 400,000 barrels per day.

Exxon posted a loss of $610 million, or 14 cents per share, in the quarter, compared with a profit of $2.35 billion, or 55 cents per share, a year earlier.

Excluding charges, adjusted profit was 53 cents a share, Earnings from oil and gas production fell 91% from a year ago on weak oil prices.

Exxon’s volumes were higher, with its U.S. shale production up 56% from a year ago.

Trade Gains and profits in the Downstream cushioned Operation loss and Inventory charges

Its refining business swung to a $611 million operating loss on weak demand and inventory charges. Lower costs and gains from trading helped limit losses, the company said.

The chemical unit posted a profit of $144 million, down 75% from a year ago but up from a fourth-quarter loss.

“The downstream in particular came in ahead of our expectations,” wrote RBC Capital Markets analyst Biraj Borkhataria. The chemicals unit “was a better result than any time in 2019,” he added.

Its shares were down 3% at $45.03 in morning trading. The stock is down 34% this year.

Exxon’s production rose slightly to about 4 million barrels of oil equivalent per day (boepd) from 3.98 million boepd. A goal of producing 750,000 bpd from Guyana discoveries by 2025 would be pushed back a year, Exxon said.

Plummeting Demand and Oil Price Crash has Smacked Down a once buoyant Oil Industry

Oil and gas exploration and production (E&P) companies around the world are set to see their total annual revenues plunge by a whopping US$1 trillion this year, due to the coronavirus pandemic and its effect on global oil demand and prices, Rystad Energy said in an analysis this week.

Before the pandemic, Rystad Energy was forecasting annual E&P revenues at US$2.35 trillion this year and US$2.52 trillion in 2021.

The research firm also slashed its projections for total E&P revenues for 2021 —to US$1.79 trillion.

The pandemic is already wreaking havoc on the finances of the world’s top oil exporter, Saudi Arabia.

Oil majors, who began reporting Q1 earnings this week, are also being hit hard by the demand and oil price crash in the pandemic, with Shell announcing today its first dividend cut since World War II