Exxon lost money for a record third straight quarter and disclosed that further capital spending cuts and possible writedowns of assets are ahead as it battles the pandemic-induced slump in demand for oil and gas.
For the third quarter, the oil major reported Friday a loss of $680 million, or 15 cents per share, as revenue fell nearly 29% to $46.2 billion. The adjusted loss came in at 18 cents per share, beating analysts’ estimates of 25 cents per share.
Exxon had lost $1 billion in the second quarter and $610 million in the first quarter — its first loss in decades — due to the pandemic’s impact on demand and commodity prices.
“We remain confident in our long-term strategy and the fundamentals of our business, and are taking the necessary actions to preserve value while protecting the balance sheet and dividend,” CEO Darren Woods said in a news release.
As the Houston Chronicle reports, Exxon was “the world’s most valuable company just seven years ago but [is] now reeling from the coronavirus-driven downturn.” It was recently removed from the Dow Jones Industrial Average.
Woods “invested heavily before the pandemic to grow Exxon’s oil and gas production by 2025,” The Wall Street Journal noted. “That decision has backfired as commodity prices plunged this year, forcing the company to make substantial cuts and painful choices about where to invest.”
On Friday, Exxon said it would reduce its capital expenditures to between $16 billion and $19 billion next year after cutting spending to $23 billion this year after the pandemic took hold. “We are on pace to achieve our 2020 cost-reduction targets,” Woods said.
Additionally, Exxon said that depending on the outcome of its planning process, long-lived assets with book values of approximately $25 billion to $30 billion “could be at risk for significant impairment” through writedowns.
“Exxon had stood out among its peers this year for resisting large writedowns,” the WSJ said. “Its disclosure Friday that it could take a huge one comes after months of pressure from analysts and others who argued it needed to do so.”