Exxon, Chevron Earnings Gutted by Virus-Driven Demand Slump

Business News/Analysis

July 31, 2020

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by Kevin Crowley (Bloomberg/Yahoo! Finance) 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.

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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.

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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. READ MORE

US biofuels less competitive in low energy price environments, future uncertain – Valero (ICIS)

ConocoPhillips sinks to $1bn loss on weak oil price (Financial Times)

Exxon Used to Be America’s Most Valuable Company. What Happened? — The oil giant doubled down on oil and gas before the pandemic crushed demand (Wall Street Journal)

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