Exxon posts $610 million quarterly loss - its first in 30 years - amid plunging oil demand and collapsing prices, as it and Chevron curtail US shale oil production
- Exxon on Friday posted a $610 million first-quarter loss, its first loss in 30 years
- Chevron posted a $3.6 billion profit on asset sales and improved refining results
- Both companies will slash spending budgets by 30 percent this year
- Outlined deep cuts in output and investments in the Permian shale basin
- Shale production has made US the top global producer of oil
- Here’s how to help people impacted by Covid-19
Exxon Mobil has posted its first loss in three decades, as that company and Chevron say they are sharply curtailing U.S. shale oil production with fuel demand plunging due to global lockdowns to fight the coronavirus pandemic.
Exxon on Friday posted a $610 million first-quarter loss, its first quarterly loss in three decades, on a nearly $3 billion inventory writedown reflecting lower margins and prices.
Chevron posted a $3.6 billion profit on asset sales and improved refining results, and also said it would further reduce spending this year.
Both companies will slash spending budgets by 30 percent this year, saying the spending cuts will weigh heavily on shale oil production, which has made the U.S. the top oil producer in the world in recent years.
Exxon on Friday posted a $610 million first-quarter loss, its first quarterly loss in three decades, on a nearly $3 billion inventory writedown
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Chevron cut its capital spending budget to $14 billion and Exxon has set 2020 spending at $23 billion, the lowest in four years.
Exxon's revenue was $56.16 billion, down 12% from the same quarter in 2019.
Fewer people flew or drove as the world fought to contain the spread of COVID-19, decreasing the need for jet fuel and gasoline. That resulted in oversupplied markets and unprecedented pressure on prices and margins, said CEO Darren Woods.
Despite plummeting demand, Exxon produced 4 million barrels per day of oil, up 2% from the same time last year.
'While we manage through these challenging times, we are not losing sight of the long-term fundamentals that drive our business,' Woods said.
'Economic activity will return, and populations and standards of living will increase, which will in turn drive demand for our products and a recovery of the industry.'
Chevron oil exploration drilling site near Midland, Texas in the Permian Basin. Both Exxon and Chevron on Friday outlined deep cuts in output and investments in the Permian shale basin
A customer fills a vehicle with gasoline at a Chevron station in San Francisco in a file photo
The oil industry was facing stark challenges even before the coronavirus hit, when prices were low because of a trade war between the U.S. and China which contributed to a global economic slowdown.
As lockdowns began to spread around the world during the first quarter, oil use plummeted and prices fell.
Then Saudi Arabia, in a power struggle with Russia, began flooding the market with oil, pushing prices down even further.
Both Exxon and Chevron on Friday outlined deep cuts in output and investments in the Permian shale basin, the top U.S. oilfield where growth in recent years made America the world's top oil producer and a net exporter for the first time in decades.
Oil and gas output at both U.S. producers rose in the first quarter ahead of planned cuts. Each had been racing to hit 1 million barrels per day of production in the Permian. But fuel demand sank nearly a third this year as travel and business lockdowns collided with a flood of Russian and Saudi oil hitting the market when those countries abandoned production cuts.
A sign for an Exxon gas station stands in a Brooklyn neighborhood in 2016 in New York City
Exxon stock dropped on Friday, as seen in this one-day view of the company's share price
Chevron stock dropped on Friday, as seen in this one-day view of the company's share price
Prices for U.S. crude have dropped nearly 70 percent this year, and actually settled in negative territory on April 20 for the first time ever.
On Friday, Exxon and Chevron, the two top U.S. oil producers, announced shut-ins of up to 400,000 barrels per day (bpd) this quarter, much of it from their U.S. shale units.
The two oil majors spent heavily in the last two years to expand in the Permian. Shale production can be brought on faster than deepwater and other oil exploration projects but requires near-constant drilling to maintain output.
Both companies have been rapidly sidelining Permian drilling equipment since prices crashed starting in March.
'We would intend to bring activity back to the Permian when we see prices recover,' said Chevron Chief Financial Officer Pierre Breber in an interview.
