Daily Management Review

Exxon Mobil reduced profits, Chevron at a loss


In the II quarter of 2016, the world’s and US largest oil company Exxon Mobil Corp. reduced net profit by 59% due to the continued low commodity prices and deteriorating refinery margins. US oil company Chevron Corp., second in terms of capitalization and revenues in April-June unexpectedly recorded a net loss of the third quarter in a row.

Minale Tattersfield Roadside Retail
Minale Tattersfield Roadside Retail
Exxon's net profit in the April-June fell to $ 1.7 billion, or $ 0.41 per share, compared with $ 4.19 billion, or $ 1 per share, for the same period last year.

Quarterly results were significantly worse than market expectations. Exxon’s share price fell by 2.7% in the primary auction in New York.

The company's profit has been declining for seven consecutive quarters, the last time such a long period of reduction was observed in 2001-2002.

Exxon's revenue decreased by 22% in I quarter with $ 74.1 billion to $ 57.69 billion.

Analysts polled by Thomson Reuters on average forecasted net profit of Exxon at $ 0.64 per share on revenue of $ 60.64 billion.

According to the company’s CEO Rex Tillerson, the results "are reflecting the volatile situation in the industry."

Production of hydrocarbons almost unchanged in oil equivalent. It has amounted to about 4 million barrels per day, including oil production increased by 1.7%, and natural gas production decreased by 3.6%.

Total capital expenditures, as well as costs of exploration work, decreased by 38% compared to II quarter 2015 to $ 5.2 billion.

In the area of exploration and production of hydrocarbons (upstream), Exxon made a profit of $ 294 million in April-June, which is $ 1.7 billion less than a year earlier. The United States division increased its quarterly loss to $ 47 million to $ 514 million.

The company's profit from oil processing decreased by $ 681 million to $ 825 million. Profit in the petrochemical segment decreased by $ 49 million to $ 1.2 billion. Revenues from refining declined by an average of 30% from $ 24.42 to $ 17.12 per barrel.

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

From the beginning, the company's market cap increased by 13%. It fell by 16% last year, which is the worst dynamics since 1981.

Chevron’s net loss in the II quarter was $ 1.47 billion, or $ 0.78 per share, compared to net income of $ 571 million, or $ 0.30 per share, a year earlier.

Companies in the April-June had to write off $ 2.8 billion due to impairment of assets. Excluding write-off, adjusted earnings were $ 0.35 per share, exceeding average forecast of experts ($ 0.32 per share).

Quarterly revenue of Chevron declined by 27% from $ 40.4 billion to $ 29.28 billion. Analysts polled by FactSet expected revenue of $ 28.3 billion.

"Results for the II quarter reflected the decline in oil prices and ongoing adjustment of our activities in terms of oil prices reduce," - said CEO John Watson.

Chevron has kept the quarterly dividend at $ 1.07 per share. The company has not increased the dividend from the II quarter of 2014.

Chevron’s oil and gas production in the II quarter fell to 2.53 million barrels of oil equivalent per day, compared with 2.6 million a year earlier.

Chevron's share price fell by 1.7% in trading on the stock exchange in New York. From the beginning, the company's market capitalization increased by 13% to $ 191.8 billion. 

source: bloomberg.com