NEW YORK – ExxonMobil posted on Friday its first quarterly loss in 32 years amid a steep drop in demand stemming from global efforts to mitigate the spread of the novel coronavirus.
Another American oil supermajor, Chevron Corp., earned sharply higher profits in the first quarter, but also announced plans to further cut capital spending in response to the complicated market conditions.
Irving, Texas-based Exxon sustained a net loss of $610 million between January and March, the first time since 1988 that the company has failed to register a quarterly profit.
That result contrasts sharply with the company’s performance in the first quarter of 2019, when it posted net income of $2.35 billion. Exxon’s total revenues fell between January and March to $56.16 billion, a decline of 12 percent from the first quarter of 2019.
Exxon said its first-quarter net loss was driven by a “$2.9 billion non-cash charge” from write-downs related to sharply lower oil prices, including a 70 percent plunge in the price of West Texas Intermediate crude (the US oil benchmark) since the start of the year because of the global economic shutdown.
“COVID-19 has significantly impacted near-term demand, resulting in oversupplied markets and unprecedented pressure on commodity prices and margins,” Darren Woods, Exxon’s chairman and chief executive officer, was quoted as saying in a news release accompanying the release of the first-quarter results.
Despite the drop in demand, Exxon produced 4 million barrels of oil equivalent (boe) per day in the first quarter (up 2 percent from January-March 2019) thanks to growth in its projects in Guyana and the Permian basin of the southwestern US.
The company, however, projected that it will reduce production by 400,000 boe per day in the second quarter.
In a teleconference with analysts, Woods projected that global oil output will fall by between 4 million and 12 million barrels per day with respect to 2019 and said the cuts announced by OPEC and its partners are insufficient to compensate for the loss of demand.
The chairman and CEO of Exxon, which announced it is reducing 2020 capital spending by 30 percent and cash operating expenses by 15 percent in response to low commodity prices, said he remains confident the economy will recover slowly but predicted a difficult summer ahead.
Chevron, for its part, posted net income of $3.6 billion for the three months ended March 31, up 36 percent from the first quarter of 2019.
The San Ramon, California-based company said on Friday its earnings were boosted by “a gain of $240 million associated with the sale of upstream assets in the Philippines and favorable tax items totaling $440 million attributable to international upstream.”
It also said it received a $514 million earnings boost from foreign currency effects.
But Chevron said its total revenues fell by 10.5 percent to $31.5 billion and warned that the pandemic-triggered sharp drop in global oil prices would cause its future financial results to be “depressed” as long as current market conditions persist.
In that regard, it said it is reducing its 2020 capital expenditure guidance by up to $2 billion to $14 billion and projected that its operating costs this year will fall by $1 billion.
Chevron, which produced 3.24 million barrels of oil equivalent per day worldwide in the first quarter, up 6 percent from January-March 2019 and a new quarterly record for the company, also said in a teleconference with analysts that its decline in output in the second quarter will be in line with Exxon’s – by up to 300,000 boe in May and by as much as 400,000 boe in June.
Unlike some European rivals like Royal Dutch Shell, which slashed on Thursday its shareholder dividend for the first time since World War II, neither of these two US oil companies has announced plans to cut dividend payments to shareholders amid the crisis.