Exxon shares were down 1.9% during early trading prior to the U.S. markets opening on Friday.
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Exxon has moved to conserve cash in a sign that it doesn’t expect a quick rebound in crude prices. Capital spending is down about 12% so far this year compared to last for both Exxon and Chevron.
To put in perspective just how much the picture has changed for Big Oil, Exxon used to be the biggest company in the world by market capitalization in 2009. BP Plc cut its budget for the second time this year, while Shell said it would lay off 6,500 workers.
“This is the beginning, not the end, of the writedown process”, Paul Sankey, an energy analyst at Wolfe Research LLC, said on Bloomberg TV.
The results of the companies, and those of nearly the entire oil patch this week, were disappointing but not all that surprising since the price of oil is now half what it was a year ago.
Oil entered its second bear market since mid-2014 this month as a flood of output from North American shale regions, the Persian Gulf and deepwater fields overwhelmed consumption by refiners and chemical producers.
Chevron’s shares fell $3.42, or 3.7 percent, to $ 89.61 in midday trading Friday. Exxon expanded oil production in every region where it operates except Australia/Oceania. While government officials try to soothe investors’ fears with a lot of “happy talk”, new indicators suggest the U.S. economy may be on the verge of collapse. Worldwide said in a note to clients. “This will not happen quickly unless prices fall even further from recent levels”, discouraging new drilling.
Shares of Chevron and Exxon have lost 28 percent and 16 percent, repectively, over the last 12 months. Revenue fell to $40.4 billion, from almost $58 billion a year ago.
On the other hand, Exxon Mobil delivered earnings of $4.2 billion or $1.00 per share for the second quarter, down by 52% from $8.79 billion or $2.05 per share in the same period previous year. The per-share result was 11 cents lower than the average estimate of 20 analysts in a Bloomberg survey.
“A second straight quarterly loss in the U.S. production segment was a surprise, given that oil prices were higher than the last quarter”, said Brian M. Youngberg, a senior energy analyst at Edward Jones.
Plunging oil prices are putting pressure on big energy companies as hasn’t been seen in at least a decade.
Shares of Exxon Mobil traded down $2.74 or 3.29 percent to $80.28 early Friday.
Global oil prices have fallen more than 50% since last June, and settled Friday at $52 a barrel, the lowest since January.
According to the analyst consensus for Exxon Mobil’s (NYSE:XOM) revenues and EPS, the company is expected to report revenue of $4.47 billion with earnings per share of $1.11.
The lower oil prices are helping consumers.
Wages and salaries in the US rose in the second quarter at the slowest pace on record, dashing projections that an improving labour market would boost pay.
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“Regardless of industry conditions we remain focused on what we control”, Jeff Woodbury, vice president of investor relations and secretary for Exxon Mobil, said July 31 on a conference call.
