Exxon Posts Third Straight Quarterly Loss As Pandemic Hits Demand, Costs

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HOUSTON: Exxon Mobil Corp posted its third straight quarterly loss on Friday and detailed deeper spending cuts to return, because the oil main reels from the COVID-19 pandemic’s affect on power demand and costs.

The biggest U.S. oil producer by quantity mentioned it is going to slash its capital spending for 2021 to between $16 billion and $19 billion, a reduce of as a lot as 30% from this yr’s plan.

The transfer indicators the corporate will proceed to battle to guard its wealthy shareholder dividend payout, now yielding 11%, by delaying initiatives. Its 2021 spending plans are decrease than rival Royal Dutch Shell Plc’s .

It additionally mentioned it was reassessing its pure gasoline holdings in North America and will promote or take impairments on property with a ebook worth of as a lot as $25 billion to $30 billion – however provided that it modifications its long-term improvement plans. It’s evaluating these property this quarter, which embrace properties it added with its 2010 buy of XTO Vitality, a deal value roughly $30 billion on the time.

Exxon beat expectations with an adjusted lack of 18 cents per share. Analysts had anticipated a lack of 25 cents per share, Refinitiv Eikon knowledge confirmed.

Oil corporations final quarter continued to undergo from weak costs for his or her merchandise, however rivals Chevron Corp , Shell and BP Plc additionally posted higher-than-expected outcomes after deep value cuts this yr.

“We stay assured in our long-term technique and the basics of our enterprise,” mentioned Chief Govt Darren Woods, including that Exxon would proceed to guard its shareholder dividend.

Exxon is seeking to promote extra property and plans to carry debt at second quarter ranges of round $69.5 billion, mentioned Chief Monetary Officer Andrew Swiger on a name with analysts.

It has spent about $16.5 billion this yr on new initiatives and had deliberate round $23 billion for the complete yr.

The potential write down of shale gasoline “has been looming giant for a while” and would “draw a line within the sand on the poor timing round its XTO acquisition a decade in the past,” mentioned RBC Capital Markets analyst Biraj Borkhataria.

Exxon’s third-quarter internet loss was $680 million, or 15 cents per share, in contrast with a revenue of $3.17 billion, or 75 cents per share, a yr earlier.

Shares closed 1% decrease on Friday at $32.62.

Its output fell 5.8% to three.67 million barrels of oil equal per day within the quarter, because the Group of the Petroleum Exporting Nations curtailed output and the corporate pulled again manufacturing in different areas as a result of low costs.

Exploration and manufacturing, Exxon’s largest enterprise, misplaced $383 million, in contrast with a revenue of $2.2 billion final yr.

Outcomes have been boosted by its chemical compounds enterprise, which earned $661 million, up from $241 million final yr on packaging demand and recovering auto and development markets. Exxon’s chemical compounds enterprise frequently generated $1 billion in quarterly revenue as not too long ago as 2018.

Its refining enterprise reported a lack of $231 million, in contrast with earnings of $1.2 billion final yr, on decrease margins and weaker situations for refiners because the pandemic eats into journey.

“Exxon isn’t getting the identical profit from sturdy advertising as seen by some friends” and the its exploration enterprise “continues to be weak,” mentioned Anish Kapadia, director at London-based Palissy Advisors.

Even with decreased spending plans, the corporate is prone to see destructive free money circulate by means of 2021, mentioned Jennifer Rowland, an analyst with Edward Jones.

“This calls into query how lengthy the corporate can proceed to make use of debt to fund its dividend,” she mentioned, including that it’s prone to being reduce late subsequent yr.

This week, Exxon mentioned it will reduce its workforce by about 15% and saved its fourth-quarter dividend flat at 87 cents a share.

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