While Exxon slashed its capital budget by 38 percent during the quarter, to $5.16 billion, cost cuts were not enough to offset depressed oil prices, which have dragged down huge swaths of the commodities sector.
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Exxon reported a $1.7 billion second-quarter profit that was its lowest since the first quarter of 1999, before the Mobil Corp. acquisition that shaped the company into its current form. The cuts total more than $150 billion through next year.
Chevron posted a loss of $1.47 billion for the quarter after turning a $571 million profit in the same period a year earlier, while Exxon’s profit declined 59% to $1.7 billion.
The profit was 41 cents per share, well below the 64 cents per share forecast from analysts surveyed by FactSet.
Fadel Gheit, a financial analyst with Oppenheimer & Co., stated that since the market for crude oil is tanking “you can not recover no matter how efficient you are”, according to Bloomberg. Average crude oil price came in at $36 versus $50 in the corresponding period a year ago (CPLY).
The reports from the two biggest USA oil companies followed weak second-quarter results from BP and Royal Dutch Shell.
“The results reflect sharply lower commodity prices, weaker refining margins and continued strength in the Chemical segment”, ExxonMobil stated.
Chevron’s asset base is deeper considering its size in terms of production is significantly smaller than Exxon’s, he said.
Both crude and natural gas prices dropped significantly from a year ago, dropping “30 percent to a second-quarter average of $17.12 a barrel from $24.42 a year earlier”, reports Bloomberg.
The world’s biggest oil explorer by market value said wildfires that ravaged the oil-sands region of western Canada as well as aging wells negatively impacted output. This week, US oil hit a three-month low, and Exxon shares lost 4 percent through Thursday’s close.
Besides low oil prices, a one-time impairment of certain money-losing operations at Chevron fueled the red ink for the second quarter. Chevron later reported a $1.47 billion loss, its third straight.
“When crude prices collapsed, (refiners) decided to make as much gasoline as they could”, said Stewart Glickman, an analyst for S&P Global Market Intelligence. An estimated 150,000 energy workers have lost their jobs in the United States, while more than 150 oil and gas companies in North America have filed for bankruptcy since early 2015. Amazon reported it sold $30.4 billion in goods in the quarter, up 31 percent from a year earlier.
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But US growth came in at a tepid 1.2 percent, according to official data, well below the 2.6 percent analyst estimate. Chevron fell 1 percent to $100.76. Despite pressure exerted on corporate purse strings, Exxon said it was able to keep production relatively stable at an average 4 million barrels of oil equivalent per day across its portfolio. Because of the volume of reader comments, we can not review individual moderation decisions with readers.
