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UPDATE 2-Exxon posts second straight quarterly loss on demand, price plunge

Fri, 31st Jul 2020 13:07

(Adds detail, context, results for business units, CEO quote,
analyst comment, recasts first paragraph)

By Jennifer Hiller

HOUSTON, July 31 (Reuters) - Exxon Mobil Corp on
Friday reported a $1.1 billion second-quarter loss on sharply
lower energy demand and prices from the COVID-19 pandemic, and
confirmed plans to make "significant" reduction to costs.

It was the first back-to-back quarterly loss for the oil
giant in at least 36 years, but was small in comparison to
rivals that have written down oil and gas properties by billions
of dollars apiece on expectations that prices will remain low.
The top U.S. oil producer took no impairments during the
quarter, and got a 44 cent a share boost to earnings by
reversing inventory valuations.

Chevron Corp, Total, Royal Dutch Shell
, and Eni each wrote down billions of dollars
in assets, while BP signaled an up to $17.5 billion hit.

The COVID-19 pandemic slashed oil prices, sending Exxon's
oil and gas production business to a loss. Its refining
businesses was hit by a fall in demand, but an improvement in
inventory valuations pushed overall refining profits into the
black by nearly $1 billion.

The U.S. oil major reported a loss of $1.08 billion, or 26
cents per share, in the three months ended June 30, compared
with a profit of $3.13 billion, or 73 cents per share, a year
earlier.

An adjusted loss of 70 cents per share missed Wall Street's
estimate of 61 cents, according to Refinitiv.

Oil and gas output fell 7% from a year earlier to 3.6
million barrels per day in the quarter as it curtailed output
due to the oil price crash and threat that global oil storage
would fill in May.

The pandemic "significantly impacted our second quarter
financial results with lower prices, margins, and sales
volumes," said Chief Executive Darren Woods.

Prior to the pandemic, Exxon pursued an ambitious spending
plan to boost oil output and turnaround sagging profits on a bet
that a growing global middle class would demand more of its
products.

But Woods's plan to raise production and money by selling
some assets has stumbled and the company has slashed its capital
spending plans for this year by 30%. Exxon is preparing deeper
spending and job cuts, according to people familiar with the
matter, as it fights to preserve a 8% shareholder dividend.

It said on Friday it had identified more potential cost cuts
and was doing an "evaluation across the businesses on a
country-by-country basis."

Its production business reported a nearly $1.7 billion loss
as the company curtailed output and suffered from lower oil
prices, compared with a $3.3 billion gain last year.

Profits in chemicals were $467 million, up from $188 million
last year, and "resilient" in a tough environment, said analyst
Biraj Borkhataria of RBC Europe Limited.

But Exxon's cash flow of $1.5 billion "pales in comparison
to European counterparts this quarter, all of which are smaller
businesses," Borkhataria said.

Shares were down 2.3% to $41.98 in premarket trading. The
stock is down by half since Woods took over in 2017.
(Reporting by Jennifer Hiller in Houston and Arathy S Nair in
Bengaluru; Editing by Marguerita Choy and Jason Neely)

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