Exxon Suffers $610 Million Loss In First Quarter Due To Depleting Oil Demand

Exxon Mobil posted its first loss in decades on Friday following a decline in demand caused by coronavirus, as oil prices plummeted to record lows.

In the first quarter the oil giant suffered $610 million in losses as a result of write-downs of $2.9 billion related to declining oil prices. Exxon reported a 14-cents GAAP loss per share, and a 53-cents non-GAAP profit per share. Revenue collapsed to $56.16 billion.

The company gained $2.35 billion, or 55 cents per share, from sales of $63.63 billion in the same period a year earlier. Exxon's stock fell on Friday at 7.2 percent.

Exxon said it reduced capital expenditure by 30 percent to $23 billion this year and operating expenditure by 15 percent. During the coronavirus crisis, the firm said its goal was to continue pouring money in industry-favored ventures to generate value, conserve cash for dividend, and make reasonable use of its balance sheet.

Global demand for fuel has tumbled by a third over lockdowns and company shutdowns linked to coronavirus. Oil giants have largely recorded losses from an oil surplus that has driven prices to record lows on lower margins and write-downs.

All of Exxon's businesses reported falling income or broader losses, except for chemicals, where a year ago, low oil and gas prices raised revenues. 

According to Exxon Chief Executive Darren Woods, the crisis has dramatically taken a huge toll on demand in the near term, leading to over-supplied markets and unprecedented pressure on commodity prices and margins.

Fewer people flew or rode as the planet fought to contain the pandemic, reducing the need for jet fuel and gasoline. Which led to over-supplied markets and extreme price and margin pressures, Woods said in a news release. Despite falling demand, Exxon's generated 4 million barrels of oil per day, up 2 per cent from last year's same period.

The U.S. oil standard, West Texas Intermediate, fell more than 70 percent this year, prompting energy firms to curb spending and, in some cases, cut their dividend.

Yet Exxon has said the company has no plans to slash its dividend, and the company said it would hold its dividend at 87 cents per share on Wednesday, ahead of the earnings report.

Oil and gas output earnings fell 91 per cent on low oil prices from a year earlier, but benefited from higher volumes. Exxon's U.S. shale production grew from a year-ago by 56 per cent.

The refining operation, though swinging to a record operating loss on poor demand and inventory charges, was supported by lower trading costs and earnings, the company said.