NEW YORK: Exxon Mobil and Chevron reported hefty losses in the latest quarter Friday as the weakened economic outlook due to the coronavirus pandemic pressures the industry to double down on cost cuts.
“We’ve never seen a market demand crash so far so deep,” said Exxon Mobil senior vice president Neil Chapman, reports AFP.While he noted early signs of recovery in motor fuel demand, a recovery in jet fuel is “likely to be much slower,” Chapman said, pointing to a dearth of international flights.
Exxon Mobil reported a loss of $1.1 billion in the second quarter, the biggest since the Exxon-Mobil merger in 1999.
Meanwhile, Chevron lost $8.3 billion in the same period, as it slashed the value of assets on expectations that commodity prices will stay down longer.
The figures incorporated a downgrade to the value of assets in Venezuela.
Weak economic conditions could weigh on Chevron’s results “into the third quarter” due to “significantly reduced” demand for petroleum-based products, chief executive Mike Wirth warned.
“Given the uncertainties associated with economic recovery, and ample oil and gas supplies, we made a downward revision to our commodity price outlook which resulted in asset impairments and other charges.”And Chevron’s chief financial officer Pierre Breber said on a conference call that the future was impossible to know, but the company was preparing for oil prices that are “lower for longer.”
The losses come on the heels of similar reports Thursday from Royal Dutch Shell, Total and Eni and underscore the depressed state of affairs globally for a sector tied closely to the real economy.
Exxon Mobil’s revenues fell by more than 50 percent to $32.6 billion in the quarter, while Chevron’s revenues fell by almost two-thirds to $13.5 billion.
Although oil prices have returned to around $40 a barrel, they were still significantly below the same period of 2019. That led to losses at both companies in exploration and production.
Weak demand also weighed on downstream operations, although Exxon Mobil’s international refining arm was profitable due to lower expenses and improved operations compared to the 2019 period.
Chapman, in a conference call with analysts, said the company was reevaluating its oil price assumptions, but signaled it would rein in spending and not take on any more debt.