October 28, 2020

Exxon Warns of Another Drop in Second-Quarter Profits

The main US oil company, Exxon Mobil, announced on Thursday that it will again suffer heavy losses in its oil and gas refining and production operations in the second quarter, the results of which it plans to publish by the end of July.

Exxon calculated that the drop in oil and gas prices will result in losses of between 2,500 and 3,000 million dollars, compared to the first quarter in which the profits in these areas were 536 million dollars, according to a regulatory document released this morning.

Specifically, the oil company calculates that the losses due to the fall in the prices of black gold could be between 2,500 and 2,100 million dollars, while that of the gas would be between 500 and 400 million.

Likewise, Exxon points out in the document losses in other areas such as the production of fuels such as gasoline and diesel and due to higher costs due to logistics operations related to crude oil in North America. In total, these areas recorded losses of between 800 million and 1.2 billion.

Despite this warning, its value in the New York Stock Exchange experienced an increase mid-session this Thursday, with a rise of 1.51%.

The drop in commercial and business activity, as well as long-distance travel worldwide due to the pandemic, has negatively affected oil prices, which have suffered a record drop in the past months.

Analysts expect Exxon, which will release its results on July 31, to announce a loss of about $ 2.3 billion in the second quarter, according to FactSet.

Last May, Exxon recorded losses in the first quarter of 2020 for the first time in decades, impacted by the drop in demand caused by the COVID-19 pandemic.

Irving, Texas-based Exxon lost $ 610 million between January and March, a poor quarterly result not seen for 32 years and in contrast to the $ 2.35 billion it earned in the same stretch of 2019. In addition, It had a decrease in turnover close to 12% year-on-year, to 56,158 million.

In response to the consequences of the crisis, Exxon announced after the first quarter a capital expenditure cut of 30% until the end of the year – now standing at 23 billion – and a reduction in cash operating expenses of 15%.


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