ExxonMobil announced its third consecutive quarterly loss on Friday as it slashed planned capital spending for next year and warned of “significant” impairments in the coming months.
The oil supermajor posted a net loss of $680m in the three months to September, down from a $3.2bn profit in the same period last year.
Underlining the persistent effects of this year’s oil price crash, it said it would cut capital expenditures — already drastically reduced this year — by up to a third next year and that assets with values of up to $30bn were at risk of writedowns as it carries out a portfolio review in the coming months.
The writedowns could apply to its dry gas portfolio, it said, including assets it acquired in 2009 when it bought XTO Energy for $41bn — a deal in which Exxon is considered to have vastly overpaid.
“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,” chief executive Darren Woods said.
“We are on pace to achieve our 2020 cost-reduction targets and are progressing additional savings next year as we manage through this unprecedented down cycle.”
Exxon plans to reduce capital spending to $23bn this year — a third less than it had originally planned — and shrink operating costs by 15 per cent. But it said the cuts would continue into 2021 with capex expected to fall as low as $16bn next year. The company on Thursday announced plans to reduce its workforce by 15 per cent — or more than 14,000 jobs — by the end of 2020.
Revenues of $46bn were down by about 30 per cent on the same period last year. Upstream production was down 7 per cent to 3.7m barrels a day.
Companies across the sector have struggled in the wake of the price crash earlier this year triggered by the pandemic. Exxon rival Chevron on Friday posted a $207m loss for the same period, compared with a profit of $2.6bn.
Chevron chief Mike Wirth said the hit to demand triggered by the virus continued to weigh on the sector.
“The world’s economy continues to operate below pre-pandemic levels, impacting demand for our products which are closely linked to economic activity,” he said.