Daily Management Review

Exxon's profit fell by 63%, Chevron received a loss


04/29/2016


The world's largest oil company Exxon Mobil Corp in I quarter of 2016 had the lowest profit since 1999. Chevron Corp., second in terms of capitalization and revenues US oil company, in January-March recorded a net loss the second quarter in a row.



Alf van Beem
Alf van Beem
Exxon Mobil had the lowest profit since 1999 due to the crisis in the global oil market. Previously, the crisis also made the corporation lose the highest possible credit rating. Nevertheless, earnings and revenues were better than expected.

Exxon's net profit in January-March fell by almost three times - up to $ 1.81 billion, or $ 0.43 per share, compared with $ 4.94 billion, or $ 1.17 per share, for the same period a year earlier. The company's profit has been declining for six consecutive quarters, the last time such a long period of decline was observed in 2001-2002.

Exxon's revenue decreased by 28% in the last quarter - from $ 67.6 billion to $ 48.71 billion.

Analysts polled by Thomson Reuters on average forecasted net profit of Exxon at $ 0.31 per share on revenue of $ 48.14 billion.

The production of hydrocarbons in oil equivalent increased by 1.8% in annual terms - up to 4.3 million barrels per day (b/d), including oil production due to the launch of new projects increased by 11.5%, to 2.5 million b/d. At the same time, natural gas production decreased by 9.3% to 10.7 billions of cubic feet per day.

Total capital expenditures, as well as the company's costs for exploration activities, decreased by 33% in comparison with I quarter of 2015 to $ 5.13 billion. Cash flow from operations and asset sales was $ 5 billion, including $ 177 million from the sale of assets.

In January-March, Exxon received a loss of $ 76 million against a profit of $ 2.8 billion a year earlier in the area of exploration and production of hydrocarbons. Decreased revenues from oil and gas sales reduced the quarter results by $ 2.6 billion in this segment.  

The company's profit from oil processing in January-March amounted to $ 906 million, which is $ 761 million less than in I quarter of 2015. Gains in petrochemical segment increased by 38% - to $ 1.4 billion.

Average Brent price in the I quarter was 36% lower than a year ago - $ 35.21 per barrel. The average price of natural gas in the US fell by 29% - to $ 1,982 per 1 million BTU.

ExxonMobil has exploration and production in more than 30 countries, and also has interests in 37 refineries worldwide. Upon completion of the purchase of XTO Energy in 2010, the company became the largest producer of natural gas in the United States.

ExxonMobil's share price in the primary auction in New York increased by 1%. From the beginning, the company's capitalization increased by 13%, last year it fell by 16% - this is the worst dynamics since 1981.

Chevron Corp, second in terms of capitalization and revenues US oil company, showed in January-March net loss for the second quarter in a row. Last time when Chevron started a year with a loss was almost a quarter of a century ago.

Net loss in the I quarter was $ 725 million, or $ 0.39 per share, compared to net income of $ 2.6 billion, or $ 1.37 per share, for the same period of 2015.

Quarterly revenue fell by almost a third - to $ 23.6 billion.

Analysts polled by Thomson Reuters on average expected a loss of $ 0.20 per share on revenue of $ 21.43 billion.

Previously, Chevron reported a reduction of 10% of jobs and the reduction of capital expenditures in 2016 by about a quarter. Nevertheless, the company promised to pay dividends to shareholders this week - at $ 1.07 per share, for a total of more than $ 2 billion.

Chevron’s oil and gas production in the I quarter was essentially stable - 2.67 million barrels of oil equivalent per day compared to 2.68 million a year earlier.

In the upstream area (exploration and production) Chevron in January-March received a loss of $ 1.46 billion, compared with a profit of $ 1.56 billion a year earlier. 

In the downstream segment (refining and marketing) all over the world the company’s profit cut nearly doubled - from $ 1.423 billion to $ 735 million.

Chevron's share price fell by 1.1% in the course of trading on the stock exchange in New York.

source: bloomberg.com






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