ExxonMobil (NYSE: XOM) announced a surprise loss in the first quarter on Friday due to large depreciations amid falling oil prices, posting its first quarterly loss since the 1999 merger of Exxon and Mobil.
Exxon recorded a loss of $ 610 million for the first quarter of 2020, compared to a profit of $ 2.4 billion for the first quarter of 2019, sliding into a quarterly loss for the first time in more than two decades , as low oil prices weighed on asset valuations.
The loss of Exxon is the result of a charge of $ 2.9 billion on the identified items, reflecting the impact on the valuation of non-cash inventories of the drop in commodity prices and asset impairments.
In early April, the US super major said it was “significantly reducing” its capital spending (investment), cutting investment by 2020 by 30% to around $ 23 billion, down from previously announced investments of some $ 33 billion. Exxon will also reduce operating expenses in cash by 15%, through deliberate actions to increase efficiency and reduce costs.
Exxon oil equivalent production increased 2% year-over-year to 4 million barrels per day in the first quarter of 2020. Permian production increased 20% from the fourth quarter of 2019 and jumped 56% compared to the first quarter of 2019, Exxon said today.
Exxon, like the other American Chevron supermajors and unlike certain European competitors such as Shell and Equinor, will keep cash for the dividend.
Shell cut its dividend for the first time since World War II yesterday to preserve cash and value in a very uncertain macro environment.
Commenting on Exxon’s first quarter results, its chief executive officer, Darren Woods, said:
“COVID-19 had a significant impact on short-term demand, resulting in oversupply and unprecedented pressure on commodity prices and margins.”
“Even if we manage these difficult times, we do not lose sight of the long-term fundamentals that drive our business,” added Woods.
“Our business remains strong and we will manage the current market downturn as we have done for decades,” said the boss of Exxon.
By Tsvetana Paraskova for Oilprice.com
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