Exxon Mobil posted its first quarterly loss in decades on Friday, underscoring the impact of the coronavirus pandemic on the oil industry.
The company said it lost $610 million, or 14 cents per share, compared to a profit of $2.35 billion, or 55 cents per share. Revenue fell by $7.4 billion, or nearly 12%, to $56.2 billion.
Exxon attributed the loss to $2.9 billion in inventory write-downs tied to falling oil prices. Excluding items, it made a profit of 53 cents per share.
“COVID-19 has significantly impacted near-term demand, resulting in oversupplied markets and unprecedented pressure on commodity prices and margins,” CEO Darren Woods said in a news release.
On news of the earnings, Exxon’s shares dropped 7.2% to $43.14 in trading Friday. “The company faces increased investor skepticism as oil markets have collapsed in the wake of the global pandemic, which has depressed demand for oil and gas globally,” the Houston Chronicle said.
West Texas Intermediate, the U.S. oil benchmark, has fallen more than 70% this year, forcing energy companies to slash spending and, in some cases, cut their dividend.
Exxon announced earlier this month that it would reduce spending on oil exploration and production this year by 30% to $23 billion and cut operating expenses by 15%. Global capital spending in the industry is expected to drop by up to $100 billion this year.
In the first quarter, Exxon’s oil‑equivalent production was 4 million barrels per day, up 2% from the first quarter of 2019, with a 7% increase in liquids partly offset by a 5% decrease in gas. It plans to cut production by around 400,000 oil-equivalent bpd due to “economic shut-ins and market curtailments as [a] result of COVID-19.”
“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.”