Exxon loses $610 million in the first quarter on write-downs tied to plunging oil

KEY POINTS
  • Exxon Mobil on Friday reported its first loss in decades as oil prices plunged to historic lows following a drop-off in demand due to the coronavirus.
  • The oil giant lost $610 million in the first quarter due to $2.9 billion in write-downs tied to falling oil prices.
  • “COVID-19 has significantly impacted near-term demand, resulting in oversupplied markets and unprecedented pressure on commodity prices and margins,” CEO Darren Woods said in a statement.

Exxon Mobil on Friday reported its first loss in decades as oil prices plunged to historic lows following a drop-off in demand caused by the coronavirus.

The oil giant lost $610 million in the first quarter due to $2.9 billion in write-downs tied to falling oil prices. Exxon posted a GAAP loss of 14 cents per share, and a non-GAAP profit of 53 cents per share. Revenue fell to $56.16 billion. In the same quarter a year earlier the company earned $2.35 billion, or 55 cents per share, on revenue of $63.63 billion.

Shares of Exxon slipped slipped 7.2% on Friday.

“COVID-19 has significantly impacted near-term demand, resulting in oversupplied markets and unprecedented pressure on commodity prices and margins,” CEO Darren Woods said in a statement.

The company said that oil-equivalent production in the first quarter rose 2% year over year to 4 million barrels per day. Looking forward, however, Exxon plans to cut production by around 400,000 oil-equivalent barrels per day due to “economic shut-ins and market curtailments as [a] result of COVID-19.”

West Texas Intermediate, the U.S. oil benchmark, has dropped more than 70% this year, which has forced energy companies to slash spending and in some cases, cut their dividend.

But Exxon has said the company has no plans to cut its dividend, and on Wednesday, ahead of the earnings release, the company said it would maintain its dividend at 87 cents per share.

In April, Exxon slashed its capital spending plan for 2020 by 30% from $33 billion to around $23 billion, and said it would cut operating expenses by roughly 15%. The company said the largest share of the reduction would be in the Permian Basin, where it’s easier to adjust short-cycle investments.

“Our company remains strong and we will manage through the current market downturn as we have for decades,” said Woods. “Today’s circumstances are certainly unique, but our people have the experience, our business has the scale, and we have the financial strength to see us through and emerge stronger than ever,” he added.

Shares of Exxon have lost 38% this year.

Exxon’s Darren Woods will break from oil giant’s longstanding CEO silence on quarterly results

DALLAS NEWS

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Darren Woods is breaking with tradition to become the first Exxon Mobil Corp. CEO to sit in on quarterly conference calls with analysts. But it’s not happening until next year.

Woods, who rose to chief executive in early 2017, will participate in the Irving-based company’s fourth-quarter earnings call, typically in late January or early February, Vice President of Investor Relations Jeff Woodbury said Friday in a webcast. In the meantime, a member of his inner circle will answer questions on quarterly calls.

“We believe that the investment community did not have a very good understanding of what our value growth potential was,” Woodbury said Friday during a conference call. “We have taken an extra effort in order to engage with the investment community at all levels of the corporation.”

Exxon CEO Darren Woods(Melissa Repko/Staff)
Exxon CEO Darren Woods
(Melissa Repko/Staff)

For Exxon, the announcement represents a seismic shift in corporate culture as well as a bow to investors and analysts who have said they want more direct access to Woods. Typically Woodbury hosts the calls alone.

Neither of the CEO’s predecessors — Rex Tillerson and Lee Raymond — participated in the quarterly ritual during their combined 24 years leading the company.

The comments follow an earnings report that included the worst first-quarter output since the 1999 merger with Mobil and financial results that fell short of expectations. Exxon reported first-quarter earnings of $4.65 billion, which missed analysts’ estimates despite rapidly rising crude prices.

Crude oil prices are recovering after years of low prices weighing down revenue and profit for Exxon and its peers. Higher prices helped offset higher costs and a drop in production.

The company’s profit jumped 16 percent, with earnings of $1.09 a share, a nickel shy of projections on Wall Street, according to a poll by Zacks Investment Research.

Revenue rose 16.3 percent to $68.21 billion, which easily exceeded analyst expectations of $66.07 billion.

Crude prices are up about $8 per barrel since the beginning of the year.

“Increased commodity prices, coupled with a focus on operating efficiently and strengthening our portfolio, resulted in higher earnings and the highest quarterly cash flow from operations and asset sales since 2014,” Woods said in the earnings announcement.

The Associated Press and Bloomberg