ExxonMobil, the US’s biggest oil company, suffered a loss of $610m for the first quarter of the year, in a sharp reversal from a $2.4bn profit a year earlier after taking a hefty charge to reflect plummeting oil and gas prices.
Revenue for the quarter came in at $56bn, Exxon said, below analysts’ consensus forecasts and down 12 per cent when compared with the same period in 2019. But diluted earnings per share of 53 cents were well above expectations, pleasing investment analysts. Cash flow from operations of $6.3bn was also above expectations.
Exxon announced no new cuts to planned spending in 2020 but reiterated its intent — announced last month — to slash capital expenditure by 30 per cent compared with earlier plans, to $23bn.
It also took into account the plunge in the value of crude prices with a non-cash charge of $2.9bn against the value of its inventory and assets.
“Covid-19 has significantly impacted near-term demand, resulting in oversupplied markets and unprecedented pressure on commodity prices and margins,” said Darren Woods, Exxon’s chief executive.
Oil prices have fallen by about 70 per cent since the start of the year but the worst phase of the sell-off in April will only be fully visible in producers’ second-quarter earnings.
Exxon’s statement offered no hint of a shift on shareholder distributions, despite Royal Dutch Shell’s announcement on Thursday to cut its dividend — a move considered to be a watershed moment for the industry’s supermajors.
Mr Woods noted that Exxon’s priority was “to continue investing in industry-advantaged projects to create value, preserve cash for the dividend, and make appropriate use of its balance sheet”.
Exxon’s domestic rival Chevron earlier on Friday announced a further deepening of planned spending cuts. Exxon did not follow suit but said it “continues to monitor market developments and evaluate additional reduction steps”.
The company said production from its Permian shale assets had risen 20 per cent compared with the fourth quarter of 2019 and 56 per cent compared with a year earlier. But reduced spending would bring a “slower project pace”, including in the Permian, at the Rovuma liquefied natural gas project in Mozambique and in downstream and chemical expansions.
Total output across the group rose 2 per cent compared with 4m barrels a day a year earlier.
Exxon’s US upstream business was hit hard, running a loss of $704m in the quarter versus a gain of $68m in the same period of last year. It included an impairment of $315m. The company’s downstream business lost $611m in the first quarter, down from $900m in earnings a year before.