Exxon Mobil Corp. estimated a second quarter 2020 loss of $1.1 billion compared with a first-quarter loss of $610 million and second-quarter 2019 earnings of $3.1 billion (OGJ Online, May 1, 2020; Aug. 2, 2019). Results included a noncash inventory valuation adjustment from rising commodity prices of $1.9 billion. Capital and exploration expenditures were $5.3 billion for the quarter, about $2 billion lower quarter-over-quarter.
Oil-equivalent production was 3.6 million b/d, down 7% from second-quarter 2019, including a 3% decrease in liquids and a 12% percent decrease in natural gas, mainly reflecting the impacts of COVID-19 on global demand including economic and government mandated curtailments.
“The global pandemic and oversupply conditions significantly impacted our second quarter financial results with lower prices, margins, and sales volumes. We responded decisively by reducing near-term spending and continuing work to improve efficiency by leveraging recent reorganizations,” said Darren W. Woods, chairman and chief executive officer.
The company “increased debt to a level we feel is appropriate to provide liquidity, given market uncertainties,” and based on current projections, doesn’t plan to take on any additional debt, he said.
The company has identified potential for additional reductions and is undertaking a comprehensive evaluation across the businesses on a country-by-country basis, and additional details will be provided when plans are finalized, the company said in a July 31 statement.
In the quarter, net debt increased by $10 billion compared to $8.8 billion cash outlfows. At the end of the quarter, the company had $12.6 billion cash on hand compared to $3 billion in fourth-quarter 2019.
Plans to reduce capital investment the year, to $23 billion from $33 billion, are ahead of schedule, reflecting increased efficiencies, lower market prices, and slower project pace, the company said. An expected decrease in cash operating expenses of about 15% is also ahead of schedule, capturing savings from increased efficiencies, reduced activity, and lower energy costs and volumes.
Liquids volumes were down 7% from first quarter reflecting the impact of lower demand, including economic and government mandated curtailments. Excluding these curtailment impacts, liquids volumes increased 5%. Natural gas volumes were 15% lower driven by seasonal demand in Europe and scheduled maintenance.
For the downstream segment, industry fuels margins were considerably lower than in the first quarter, reflecting the impacts of COVID-19 on demand for gasoline and jet fuel. The company experienced unfavorable mark-to-market derivative impacts associated with its trading activity, compared to favorable impacts in the previous quarter, driven by significant volatility in commodity prices across the periods.
Average refinery utilization was down significantly from first quarter on lower demand, as the company spared about 30% of its refining capacity. Over the course of the quarter, utilization increased in line with global fuel demand.
In the chemicals segment, margins were largely consistent with the first quarter. Chemical sales volumes however, while benefiting from resilient demand for essential products, were lower than first quarter driven by the impacts of COVID-19 on global demand.