Exxon Warns Production, Refining Losses to Hurt Earnings
July 02 2020 - 11:43AM
Dow Jones News
By Rebecca Elliott
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.
Exxon said in a regulatory filing that lower oil and gas prices
are poised to drag down its production profits by an estimated $2.5
billion to $3.1 billion compared with the first quarter, when that
unit of the company reported $536 million in profits.
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 company
posted a $611 million first-quarter loss in its refining
business.
Oil-and-gas companies are feeling continuing pressure as the
coronavirus pandemic leads millions of people to avoid flying and
driving, crimping world-wide demand for fossil fuels.
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 were up nearly 2% in Thursday morning
trading.
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
British thermal units during the second quarter, compared with
around $1.87 during the first quarter, FactSet data show.
Exxon said earlier this year that it planned 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 02, 2020 11:28 ET (15:28 GMT)
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