Exxon Telegraphs Deep Losses Ahead Due to Low Prices -- WSJ
July 03 2020 - 3:02AM
Dow Jones News
By Rebecca Elliott
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 3, 2020).
Exxon Mobil Corp. warned Thursday of steep losses in its
refining and oil-and-gas production businesses during the second
quarter, signaling that the company is likely to report a second
straight quarterly loss later this month.
Lower oil and gas prices are poised to drag down production
profits by an estimated $2.5 billion to $3.1 billion compared with
the first quarter, Exxon said in a regulatory filing. That unit
reported $536 million in profit in the first quarter.
Exxon expects that tighter margins on turning oil into fuels
such as gasoline and diesel and higher costs associated with moving
crude around North America will reduce refining profits by some
$800 million to $1.2 billion from the prior quarter. The refining
business posted a $611 million loss for the first quarter.
Analysts have said they expect Exxon to report a loss of about
$2.3 billion during the second quarter, according to FactSet. It is
set to disclose earnings July 31.
Exxon posted a $610 million loss during the first quarter, its
first in three decades.
The company's shares edged up 0.85% Thursday as U.S. benchmark
oil climbed about 2% to nearly $41 a barrel, its highest settlement
price since early March.
Oil-and-gas companies are feeling continuing pressure as the
coronavirus pandemic leads millions of people to avoid flying and
driving, crimping fuel demand.
Second-quarter earnings are likely to be brutal across the U.S.
oil patch because global oil demand fell by some 18% during the
period, according to the International Energy Agency, as people
around the world stayed home to keep the new coronavirus from
spreading. Oil and gas prices plunged along with consumption.
U.S. benchmark oil prices averaged about $29 a barrel during the
second quarter, compared with around $46 a barrel during the first
quarter, according to FactSet. Demand was so low and storage so
full in April that prices briefly fell below zero for the first
time on record.
Benchmark natural gas prices averaged about $1.77 per million
BTUs during the second quarter, compared with around $1.87 during
the first quarter, FactSet data show.
Exxon said earlier this year it plans to cut 2020 capital
spending by $10 billion, or 30%, and planned to trim second-quarter
production by some 400,000 barrels a day.
Write to Rebecca Elliott at rebecca.elliott@wsj.com
(END) Dow Jones Newswires
July 03, 2020 02:47 ET (06:47 GMT)
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