Exxon Mobil Q3 loss hits $680m; capital spending cut
LONDON, October 31, 2020
Exxon Mobil, one of the world's largest publicly traded international oil and gas companies, has announced its third consecutive quarterly loss even as it slashed planned capital spending for next year and warned of significant impairments in the coming months.
The global oil giant registered a net loss of $680 million ($0.15 per share) in the three months to the end of September, down from a $3.2 billion profit in the same period last year
Announcing the Q3 results, Exxon Mobil said its capital and exploration expenditures for the three-month period were put at $4.1 billion, bringing year-to-date spending to $16.6 billion, more than $6 billion lower than the prior year period.
Oil-equivalent production was 3.7 million barrels per day, up 1 percent from the second quarter of 2020.
Exxon Mobil pointed out that the production continued to reflect Covid-19 demand impacts, including economic and government mandated curtailments.
Excluding entitlement effects, divestments, and government mandates, liquids production increased 2 percent, while natural gas volumes decreased 1 percent.
On the Q3 results, Chairman and CEO Darren W. Woods said: "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."
"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," stated Woods.
The company’s preliminary 2021 capital program, which will be reviewed by the board of directors in the fourth quarter, is expected to be in the range of $16 billion to $19 billion, a reduction from the 2020 target of $23 billion announced in April.
The company expects to identify further structural efficiencies as it continues previously announced country-by-country reviews.
Exxon Mobil said average third quarter realizations for crude oil improved significantly, as market prices increased following the second quarter's challenging environment. Natural gas realizations declined, primarily due to a lag in crude-linked LNG contract pricing.
Improved market conditions enabled full recovery of production impacted by economic curtailments. Government mandated curtailments negatively impacted third quarter results and are anticipated to continue in the fourth quarter.
Supply chain optimization, higher product sales due to increased demand, and higher marketing margins more than offset lower industry fuels margins driven by market oversupply and high product inventory levels.
Third quarter saw the best reliability and process performance in the last 10 years, while average refinery utilization increased about 6 percent from the second quarter on demand recovery. Refining capacity sparing decreased to about 25 percent.
Chemical sales volumes were higher than second quarter, benefiting from resilient packaging demand and recovering automotive and construction markets. Chemical margins were negatively impacted by higher feed costs.
The company's Corpus Christi chemical complex joint venture is approximately 80 percent complete, with start-up activities expected to commence in the fourth quarter of 2021.
