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Page added on August 3, 2020

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Exxon and Chevron Post Historic Losses

Business

Exxon Mobil Corp. and Chevron Corp. posted the worst losses in a generation after the pandemic and a global crude glut combined to batter almost every part of their businesses.

Exxon’s $1.1 billion second-quarter loss was the deepest in the company’s modern history. A collapse in crude prices bled the company’s production division while Covid-19 lockdowns lowered demand for everything from jet fuel to plastic wrap, hobbling the company’s refining and chemical units.

Chevron recorded its weakest performance in at least three decades and warned that the global pandemic wreaking havoc upon energy markets may continue to drag on earnings. The explorer plans to curtail the equivalent of 5% of its worldwide output during the current quarter and backtracked on plans to massively ramp up production from its prized Permian Basin holdings.

Oil has become the poorest-performing sector of U.S. equity markets as a confluence of economic, political and structural threats coalesce to imperil the very foundations of the petroleum industry. Sweeping layoffs, budget cuts and project cancellations haven’t been enough to arrest the industry’s decline as fleeing investors made energy the worst investment in the S&P 500 Index this year.

Without the massive trading operations that shielded European oil explorers such as Royal Dutch Shell Plc and Total SE from losses, Chevron was exposed to the full force of this year’s oil price rout. Notably, Exxon’s nascent trading foray “experienced unfavorable mark-to-market derivative impacts,” the company said.

Exxon generated zero cash from operating activities during the quarter, according to a statement on Friday.

“I was looking at the press release and was like, ‘Is that a typo?’” said Jennifer Rowland, an analyst at Edward D. Jones & Co. in St. Louis. “It’s mind boggling for a company the size of Exxon.”

Exxon fell 1.8% to $41.10 in pre-market trading. Chevron declined 4.1%.

The U.S. supermajors’ woes are emblematic of the broader threats menacing the petroleum industry in what is turning out to be the deepest crisis of its 161-year history. International titans that raked in record-breaking profits during the first decade of the century have now been reduced to widespread job cuts, belt tightening and heavy borrowing to cover dividends and other outlays.

Cost Cuts

Exxon, which earlier this year began taking efforts to reduce its U.S. workforce, said it’s developing plans to further curtail operating expenses, without providing details. The company’s 26-cents per-share loss was better than the 64-cent average loss from analysts in a Bloomberg survey.

The worst-ever crude crash came at a vulnerable time for Exxon because it had just embarked on an aggressive, multibillion-dollar rebuilding program. After slashing $10 billion in capital spending and freezing dividends, Chief Executive Officer Darren Woods may be running out of levers to pull.

On Friday, Woods said that, based on current projections, the company won’t take on any additional debt. The pledge appears to be a strategic shift and a defensive move to counter investors who claimed it would test the boundaries of acceptable leverage levels in the next few years.

What Bloomberg Intelligence Says

Leverage has gone to levels not seen in recent downturns and management’s comments that it doesn’t plan to take on more leverage could indicate that a protracted recovery would force the company to cut spending further, or even its vaunted dividend.

— Fernando Valle, BI analyst

Chevron fully erased the value of its Venezuela operations from its books, amounting to $2.6 billion, after they were effectively frozen by U.S. sanctions, and wrote down another $1.8 billion in assets due to lower commodities prices.

Even stripping out the impairments, Chevron’s adjusted loss was $3 billion, more than twice the average analyst estimate in a Bloomberg survey and the deepest since at least 1989.

“While demand and commodity prices have shown signs of recovery, they are not back to pre-pandemic levels, and financial results may continue to be depressed into the third quarter 2020,” Chevron said in a statement Friday.

Venezuela and low prices aside, Chevron also had a one-off charge of $780 million related to its plan to cut 6,000 jobs, or about 13%, of its workforce.

Despite the red ink, Chevron CEO Mike Wirth saw an opportunity for expansion amid the rout: the $5 billion, all-stock takeover of Noble Energy Inc. announced less than two weeks ago. The deal comes at a minuscule premium and plugs holes in Chevron’s long-term portfolio, analysts noted.

RIGZONE



21 Comments on "Exxon and Chevron Post Historic Losses"

  1. Abraham van Helsing on Tue, 4th Aug 2020 2:38 am 

    Norway plugin market now at 68%:

    https://cleantechnica.com/2020/08/04/norway-plugin-vehicle-market-share-now-over-68/

    Norway has the money, from oil.lol

    The oil major’s historic losses are writing on the wall for their future, or lack thereof.

  2. Abraham van Helsing on Tue, 4th Aug 2020 3:08 am 

    All of a sudden Europe can produce a lot, if not all, of its lithium for car batteries from local resources, with almost zero use of fossil fuel or other negative environmental impacts. Just filter it out from the hot brine that is pumped up from deep geothermal sources:

    https://cleantechnica.com/2020/08/04/vulcan-is-a-step-closer-to-net-zero-carbon-lithium-production/

    Fantastic development for Europe, no so good for relatively dirty lithium producers in Australia, China and the Americas. The source (upper Rhine) is very near the big German and French car manufacturing centers.

    Also big boost for battery e-vehicles.

  3. Cloggie on Tue, 4th Aug 2020 3:33 am 

    More info about “direct lithium extraction”, with positive implications for the US as well:

    https://deepresource.wordpress.com/2020/07/21/sufficient-lithium-in-german-grounndwater/

    “Significant Lithium Reserves In European Groundwater”

  4. Davy on Tue, 4th Aug 2020 5:23 am 

    “The US Economy Is Stronger Than The Eurozone”
    https://www.dlacalle.com/en/the-u-s-economy-is-stronger-than-the-eurozone/

    “The United States GDP decline was smaller than consensus estimates; 2) It is notably lower than the Eurozone figure, which was worse than consensus expected; and 3) The advanced U.S. data points to one of the strongest recoveries in the world. The improvement in domestic demand that we already began to observe in the month of May has been confirmed in June. Retail sales registered an increase of +7.5% per month, the second highest number in the historical series after the May data, and this time with a less relevant “base effect”. In year-on-year terms, retail sales are already growing at +1.1% and, eliminating vehicle sales, this increase amounts to + 7.3% year-on-year. Still a lot to improve, though. Advanced and leading indicators in the United States point to a third-quarter GDP rise of 18% to 20% in annualized terms, recovering more than half of the first half of the year decline in three months…Debt in the United States is a big challenge, but -again- metrics show a better situation than the eurozone. The accumulated deficit through June already exceeds $ 2.74 trillion, more than 10% of US GDP. Interestingly, debt to GDP in the United States is likely to rise to 98.5% according to Bloomberg consensus, but not even close to the levels of the Euro-area, at 103%, according to the ECB. These figures contradict the calls for a stronger Euro vs the US Dollar. Despite the headline-grabbing U.S. figures, growth, debt, and employment are likely to show a better evolution than in the Euro-Area, and monetary metrics also show a stronger situation. The European Central Bank already has negative real rates and its balance sheet exceeds 53% of GDP compared to the Federal Reserve balance sheet of 33% of GDP. The US Dollar global demand is high and rising, and the world still has a US dollar shortage. That is not the case of the Euro, where demand is stable but much smaller, according to the Bank of International Settlements, and supply is rising much faster than the US dollar.”

  5. Mick on Tue, 4th Aug 2020 6:04 am 

    Only a very few on this site really know how bad it it’s for the oil patch industry to have WTI at around $40 for the last. 6 mouths . Hang on to your seat belts it’s going to be a bumpy ride

  6. Abraham van Helsing on Tue, 4th Aug 2020 6:31 am 

    “Why Europe’s in Better Shape Than the U.S.”

    https://www.bloomberg.com/opinion/articles/2020-07-06/coronavirus-recovery-why-europe-s-in-better-shape-than-the-u-s

  7. zero juan on Tue, 4th Aug 2020 6:41 am 

    stupid fucking sock:

    Mick said Only a very few on this site really know how bad i…

    Mick said Dunkin Idaho keep up the good work your on the m…

  8. Abraham van Helsing on Tue, 4th Aug 2020 6:57 am 

    “Only a very few on this site really know how bad it it’s for the oil patch industry to have WTI at around $40 for the last. 6 mouths . Hang on to your seat belts it’s going to be a bumpy ride”

    https://www.spiegel.de/wissenschaft/offshore-windkraft-in-kaum-fuenf-jahren-fielen-die-kosten-um-zwei-drittel-a-00000000-0002-0001-0000-000172270248

    “Cost offshore wind came down with 2/3 in less than 5 years”

    Offshore wind parks in Europe no longer need any subsidy whatsoever. Should scare the hell out of every fracking entrepreneur.

    Bye-bye Anglo Seven Sisters. Time’s up. Open your wallet and order your offshore wind park in Europe now and avoid the rush.

  9. Davy on Tue, 4th Aug 2020 7:07 am 

    “Cost offshore wind came down with 2/3 in less than 5 years”

    Bullshit cloggo, not in the bigger picture. Quit hyping lies. I am a firm believer in wind and solar but realistic. You combine you fraudulent Anglo derangement agenda with solar and wind for your personal ends not the truth.

  10. the board on Tue, 4th Aug 2020 7:08 am 

    It is so nice not having juanPPee commenting on the moderated side. He is using socks there but not his primary handle. Hopefully his chronic depression will get worse and we will not see the troll here at all!

    FUCK the douchebag

  11. Abraham van Helsing on Tue, 4th Aug 2020 7:14 am 

    “Cost offshore wind came down with 2/3 in less than 5 years”

    Bullshit cloggo, not in the bigger picture. Quit hyping lies. I am a firm believer in wind and solar but realistic. You combine you fraudulent Anglo derangement agenda with solar and wind for your personal ends not the truth.

    You forgot to add the usual “pig with lipstick”.

    The “2/3 in 5 years” data comes from a Malte Jansen (probably Dutch) from the Imperial College in London. So much for my Anglo derangement syndrome.

    But tell me umpire dave, what authoritative reference outside of the Ozarks can you field to support your somewhat repetitive “BS” rebuttal.

    Tik-tok-tik-tok

  12. Davy on Tue, 4th Aug 2020 8:22 am 

    cloggo, get back to me when you euros get further into the process at the same time your economy is drifting towards #Slovenia#. You are not honest with economics nor the physics. You are basically a fraud and can not be trusted to present the truth. Screw your tick toc BS. I have presented multiple articles from diverse sources calling into question a delusional techno-optimistic green energy transition. Transformation into a world of less prosperity is one thing your grandiose bullshit quite another.

  13. IHateThisWorld on Wed, 5th Aug 2020 12:07 pm 

    StarvingLion said:

    The junk currency is collapsing.

    INTC keeps going down.

    Gold and WTI are joined at the hip.

    Both virtual, nothing real.

    Evergy and First Energy and Exelon Corporationare getting clobbered. Apparently, the lights will go out before the gasoline pumps shut down. My discount gas station is now up for sale.

    By September, “America” will be renamed ForSaleica.com since property taxes have been deferred until then.

    Gold outperforming Dow junk yet again.

    “Armageddon” is a fraud. The Covid-19 scam is to prevent liquid fuel shortages. His paper “wealth” and rocks are useless because he can’t print gasoline.

    BMW is collapsing again. CrookMobiles are a thing of the past.

    I like this part from starvingLion:

    Evergy and First Energy and Exelon Corporationare getting clobbered. Apparently, the lights will go out before the gasoline pumps shut down. My discount gas station is now up for sale.

    This is where the monetary system is becoming useless. We cannot use money anymore to allocate where energy (Joule) is going. You have to allocate the energy (Joule) where you want it, like electrical generation station. You have to truck the energy (Joule) where you want it.

    COVID is a useless tool to allocate energy (Joule). They have to tell the population and hope that people will voluntary cooperate.

    Have a nice day StarvingLion

  14. zero juan on Wed, 5th Aug 2020 12:36 pm 

    Dumb fuck juanita PPee

    IHateThisWorld said StarvingLion said: The junk currency is collapsing…

    bochen777 im a member of CCP i love china and everyone who knows love china regarding how they handle their muzzies they amputate them and put in factory to maufacture cheap goods to sell to teh world this is a perfect system but i never reveal said our competitve advantages i want the world to be…

    REAL Green said “In this increasingly multipolar world a strong an…

    More lunacy from Davy the bored mentally ill retard said zero juan on Wed, 5th Aug 2020 11:50 am

    bochen777 said 40 years ago India was developmentally ahead of Ch…

  15. More lunacy from Davy the bored mentally ill retard on Wed, 5th Aug 2020 1:05 pm 

    Davy on Tue, 4th Aug 2020 5:23 am

    zero juan on Tue, 4th Aug 2020 6:41 am

    Davy on Tue, 4th Aug 2020 7:07 am

    the board on Tue, 4th Aug 2020 7:08 am

    Davy on Tue, 4th Aug 2020 8:22 am

    zero juan on Wed, 5th Aug 2020 12:36 pm

  16. zero juan on Wed, 5th Aug 2020 1:28 pm 

    Fuck juanita PPee

    More lunacy from Davy the bored mentally ill retard said Davy on Tue, 4th Aug 2020 5:23 am zero juan on Tu…

  17. bochen777 on Wed, 5th Aug 2020 2:17 pm 

    Amerikkka is racists, White women don’t like Chinese men…

    https://soundcloud.com/user-306646348/equal-oppurtunity

    Not a Chinaman’s chance…

  18. zero juan on Wed, 5th Aug 2020 2:25 pm 

    Juanita PPee you are bochen777

    bochen777 said Amerikkka is racists, White women don’t like Chine…

    bochen777 said Amerikkka is racists, White women don’t like Chine…

    bochen777 said Amerikkka is racists, White women don’t like…

  19. More lunacy from Davy the bored mentally ill retard on Wed, 5th Aug 2020 2:43 pm 

    zero juan on Wed, 5th Aug 2020 1:28 pm

    zero juan on Wed, 5th Aug 2020 2:25 pm

    bochen777 on Wed, 5th Aug 2020 2:27 pm

  20. Richard Guenette on Wed, 5th Aug 2020 4:00 pm 

    The US-NATO-Israel should be forced to surrender and destroy all of its WMDs openly.

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