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Bloomberg
Exxon Mobil Corp warned it may take up to $30 billion in writedowns on natural gas fields acquired more than a decade ago, and reported a third straight quarterly loss.
Exxon is confronting one of its biggest crises. If the company takes the full $30 billion impairment, it will be the industry’s worst in more than a decade, according to Bloomberg data.
The company lost $680 million, or 15 cents a share, during the third quarter, compared with the 25-cent per-share loss forecast in a Bloomberg survey of analysts. The shares are down more than 50% for the year.
That was in stark contrast to Chevron Corp, which disclosed a surprise profit as the company’s oil-production and refining divisions outperformed analysts’ expectations. Chevron’s shares rose 1.1%. European supermajors Total SE, Royal Dutch Shell Plc and BP Plc also turned in better-than-expected third-quarter performances.
Blindsided by the economic fallout from the Covid-19 pandemic, Exxon Chief Executive Officer Darren Woods abruptly ditched an ambitious rebuilding effort and imposed widespread job cuts that are unprecedented in Exxon’s modern history. His top priority has been preserving a dividend that pays shareholders $3.7 billion every three months.
The firings and layoffs will affect 14,000 workers in the US and abroad. Pandemic-induced lockdowns have crushed demand for oil, natural gas and chemicals, sending Exxon’s finances into a tailspin. Prior to 2020, the company hadn’t posted a quarterly loss in at least three decades.
Woods’s turnaround effort took another hit when the company said an internal assessment is under way to determine the future of its North American gas assets. Much of those fields were added to Exxon’s portfolio a decade ago with the $35 billion takeover of XTO Energy, when American gas prices were almost twice the current level. Exxon expects to know by the end of the year whether it’ll devote any of its drilling budget to North American gas assets, given that other projects may deliver higher returns.
The company also may put those fields up for sale, Senior Vice President Andrew Swiger said during a conference call with analysts. The company may incur additional impairments on assets in Canada, where operations include the massive Kearl oil-sands complex in Alberta, according to a statmement from Exxon’s Imperial Oil Ltd. Although third-quarter results outperformed expectations, the company is still struggling to generate enough cash to fund dividend payments and capital projects.