Oil giants lost billions as pandemic crushed demand for fuel


Two U.S. oil giants lost more than $ 9 billion in the second quarter as the pandemic kept households locked up, cutting a gaping hole in a once thriving business as oil needs dwindled around the world.

Exxon lost $ 1.1 billion in the second quarter, and the Irving, Texas-based oil producer generated revenue of $ 32.6 billion, less than half of what it earned. reported at the same time last year. Chevron Corp. lost $ 8.27 billion in the quarter, a stark contrast to the $ 4.3 billion it earned a year ago.

The quarter was one of the worst on record for the oil industry. The benchmark US crude oil price fell below $ 0 in April, a staggering drop that had yet to be seen in the industry. Producers had pumped far more oil than the world was using to move around the world, but they were all but shut down and the storage tanks were filling up. Oil consumption fell to its lowest level for more than 30 years in April, according to the US Energy Information Administration.

Oil prices have since recovered somewhat, but have stuck at around $ 40 a barrel for weeks, 30% lower than a barrel a year ago and well below what most producers need to make ends meet.

As a result, the US oil industry has lost more than 100,000 jobs since February, including 45,000 to upstream oil and gas companies in Texas alone, according to Rystad Energy, a consulting firm.

“Put simply, the destruction of demand in the second quarter was unprecedented in the history of modern oil markets,” Neil Chapman, senior vice president of Exxon, said on a conference call with investors Friday. “To put it in context, absolute demand has fallen to levels we haven’t seen for almost 20 years. We have never seen a decline of this magnitude and pace before, even compared to historical periods of demand volatility after the global financial crisis and as far back as the oil and energy crisis of the 1970s.

Exxon expects gasoline and diesel consumption to rebound to levels similar to last year in the fourth quarter, but kerosene will take longer to recover, Chapman said.

Exxon Mobil Corp. announced in April that it would cut its capital budget by 30%, to $ 23 billion, and its cash operating expenses by 15%, in 2020. The company is on track to exceed that target and is exploring other ways to cut spending, including assessing its workforce around the world, Chapman said.

The pandemic is also making some of Exxon’s job more expensive as it tries to protect employees. “We had to load planes to move our rotary operating personnel all over the world without the availability of commercial aircraft,” Chapman said. “We had to rent hotels in several cities to quarantine our people before they started their 30-day rotation.”

Exxon produced 3.6 million barrels of oil equivalent, down 7% from last year. This included a 12% drop in natural gas production. But that increased production in the Permian Basin by 9% compared to last year.

Chevron, based in San Ramon, Calif., Generated $ 13.49 billion in revenue, about a third of what it reported last year.

Most of Chevron’s losses have been in its upstream operations, or oil and gas production, including a $ 2.1 billion impact on its upstream operations in the United States and a loss of $ 4 billion in its international upstream operations. Some of its assets have lost value. Chevron canceled a $ 2.6 billion investment in Venezuela, noting a difficult operating environment in that country and saying it is not clear whether the company will recover its investment.

“Although we are disappointed with the depreciation in Venezuela, we intend to maintain the presence in the country and one day resume normal operations,” Pierre Breber, chief financial officer and vice president of Chevron, said in a conference call with Investors.

“With the health, economic and social crises all occurring at the same time, this is a difficult quarter for Chevron and its stakeholders,” said Breber.

Elsewhere, Phillips 66, the Houston-based oil refining and logistics company, lost $ 141 million in the quarter, reversing a profit from the previous year.

Despite the difficult quarter, big companies like Exxon and Chevron have an advantage over small producers because they likely have better balance sheets and better access to financial markets, said Stewart Glickman, energy equity analyst at CFRA.

“The biggest unknown is what’s going on with the price, and that’s really a guess for anyone,” Glickman said, adding that if prices have stabilized around $ 40, they could drop in the thirties to. as cases of COVID increase. “I’m not really optimistic about the evolution of oil prices. “


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