ExxonMobil reports results for second quarter 2020

July 31, 2020 5:37 AM

Global oversupply and COVID-related demand impacts drive second quarter loss of $1.1 billion
On track to meet or exceed 2020 capital and cash operating spend reduction targets
Supporting COVID-19 response by reconfiguring operations to increase production of hand sanitizer and raw materials for protective equipment for first responders

IRVING, Texas – Exxon Mobil Corporation (NYSE:XOM):



				First
	Second Quarter			Quarter		First Half
	2020		2019	2020		2020		2019
Results Summary
(Dollars in millions, except per share data)
Earnings/(Loss) (U.S. GAAP)	(1,080	)	3,130	(610	)	(1,690	)	5,480

Earnings/(Loss) Per Common Share
Assuming Dilution	(0.26	)	0.73	(0.14	)	(0.40	)	1.28

Identified Items Per Common Share
Assuming Dilution	0.44		0.12	(0.67	)	(0.23	)	0.12

Earnings/(Loss) Excluding Identified Items
Per Common Share Assuming Dilution	(0.70	)	0.61	0.53		(0.17	)	1.16

Capital and Exploration Expenditures	5,327		8,079	7,143		12,470		14,969

Exxon Mobil Corporation today announced an estimated second quarter 2020 loss of $1.1 billion, or $0.26 per share assuming dilution. Results included a positive noncash inventory valuation adjustment from rising commodity prices of $1.9 billion, or $0.44 per share assuming dilution. Capital and exploration expenditures were $5.3 billion, nearly $2 billion lower than first quarter reflecting previously announced spend reductions.

Oil-equivalent production was 3.6 million barrels per day, down 7 percent from the second quarter of 2019, including a 3 percent 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 progress we’ve made to date gives us confidence that we will meet or exceed our cost-reduction targets for 2020 and provides a strong foundation for further efficiencies.”

“We have increased debt to a level we feel is appropriate to provide liquidity, given market uncertainties. Based on current projections, we do not plan to take on any additional debt.”

The company has identified significant potential for additional reductions and is undertaking a comprehensive evaluation across the businesses on a country-by-country basis. Additional details will be provided when plans are finalized.

During the quarter, ExxonMobil continued to support COVID-19 response efforts by increasing production of isopropyl alcohol used in sanitizers and specialized polypropylene used in medical masks and gowns. In April, the company reconfigured manufacturing operations in Baton Rouge, Louisiana, to produce and bottle medical-grade hand sanitizer for donation to frontline workers across the U.S. and to the U.S. Air Force. In addition, ExxonMobil donated equipment and contributed to relief efforts around the world, as outlined on the company’s website.

Second Quarter 2020 Business Highlights

Upstream

Market prices for crude oil increased following the sharp decline at the end of the first quarter; however, average second quarter realizations for crude oil and natural gas were significantly lower reflecting the continued oversupply conditions in the market and the impacts of COVID-19 on global demand.
Liquids volumes were down 7 percent from first quarter reflecting the impact of lower demand, including economic and government mandated curtailments. Excluding these curtailment impacts, liquids volumes increased 5 percent. Natural gas volumes were 15 percent lower driven by seasonal demand in Europe and scheduled maintenance.

Downstream

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 percent of its refining capacity. Over the course of the quarter, utilization increased in line with global fuel demand.

Chemical

Chemical margins were largely consistent with 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.
The company continues to support COVID-19 response efforts, further optimizing processes to increase its monthly production of specialized polypropylene, used in masks and medical gowns, and isopropyl alcohol, used in sanitizer, by more than 10 percent.

Strengthening the Portfolio

While operations were impacted by logistical restrictions resulting from COVID-19, the company demonstrated production capacity of 120,000 gross barrels of oil per day at the Liza Phase 1 development offshore Guyana. Topsides integration is underway in Singapore on a second floating production, storage and offloading vessel, with production capacity up to 220,000 gross barrels of oil per day, to support the Liza Phase 2 development.
During the quarter, ExxonMobil commenced operations at its new Delaware central processing and exporting facility in Eddy County, New Mexico. This new processing and stabilization facility enhances the company’s integration advantages by collecting and processing oil and natural gas from its assets in the Delaware Basin for delivery to Gulf Coast markets.

Disciplined Investing and Expense Management

During the quarter, ExxonMobil made significant progress on its previously announced capital and cash operating spend reductions. Planned reductions to the company’s capital investment program for 2020, from $33 billion to $23 billion, are ahead of schedule, reflecting increased efficiencies, lower market prices, and slower project pace. The expected decrease in cash operating expenses of about 15 percent is also ahead of schedule, capturing savings from increased efficiencies, reduced activity, and lower energy costs and volumes.

Advancing Innovative Technologies and Products

During the quarter, ExxonMobil launched a first-of-its-kind high-frequency network of sensors designed to monitor and detect methane emissions in the Permian Basin. Project Astra is a collaboration with the University of Texas, Gas Technology Institute, Environmental Defense Fund and Pioneer Natural Resources that could provide a more affordable, efficient solution to address methane emissions over large areas of operations.
ExxonMobil has renewed a five-year agreement with Princeton University’s Andlinger Center for Energy and Environment to accelerate research, development and deployment of energy and environmental technologies with a focus on carbon capture and storage, carbonate fuel cells, and lower-emission technologies. The collaboration extends ExxonMobil’s participation in Princeton’s E-filliates Partnership, which began in 2015.
Scientists from ExxonMobil, the Georgia Institute of Technology and Imperial College of London published joint research on potential breakthroughs in a new membrane technology that could reduce emissions and energy intensity associated with refining crude oil. Laboratory tests indicate the patent-pending membrane could be used to replace some heat-intensive distillation at refineries in the years ahead.


Results and Volume Summary

Millions of Dollars	2Q		2Q
(unless noted)	2020		2019		Change	Comments
Upstream
U.S.	(1,197	)	335		-1,532	Lower prices
Non-U.S.	(454	)	2,926		-3,380	Lower prices and volumes partly offset by reduced expenses; unfavorable identified items (noncash inventory valuation +168, prior quarter tax item -487)
Total	(1,651	)	3,261		-4,912	Prices -4,520, volume -370, expenses +370, other -120, identified items -270
Production (koebd)	3,638		3,909		-271	Liquids -83 kbd: growth (+80 kbd), higher entitlements, and lower downtime/maintenance, more than offset by lower demand including economic curtailments, government mandates, and divestments Gas -1,130 mcfd: growth (+105 mcfd), more than offset by divestments, lower demand including economic curtailments, and reduced entitlements

Downstream
U.S.	(101	)	310		-411	Lower industry refining margins and reduced market demand, partly offset by lower expenses and improved manufacturing on lower scheduled maintenance; favorable identified item (noncash inventory valuation +404)
Non-U.S.	1,077		141		+936	Lower industry refining margins and reduced market demand more than offset by lower expenses, improved manufacturing, favorable foreign exchange, and favorable identified items (+1,199, mainly noncash inventory valuation)
Total	976		451		+525	Margins -1,680, market demand -380, expenses +340, manufacturing +500, forex +80, other +70, identified items +1,600
Petroleum Product Sales (kbd)	4,437		5,408		-971

Chemical
U.S.	171		(6	)	+177	Higher margins and lower expenses partly offset by lower volumes on weaker demand
Non-U.S.	296		194		+102	Lower expenses partly offset by lower volumes on weaker demand; favorable identified item (+142, noncash inventory valuation)
Total	467		188		+279	Margins +140, expenses +240, volumes -180, other -30, identified items +110
Prime Product Sales (kt)	5,945		6,699		-754

Corporate and financing	(872	)	(770	)	-102	Higher financing costs partly offset by lower corporate expenses


Results and Volume Summary

Millions of Dollars	2Q		1Q
(unless noted)	2020		2020		Change	Comments
Upstream
U.S.	(1,197	)	(704	)	-493	Lower prices; favorable identified items (prior quarter impairment +315, noncash inventory valuation +90)
Non-U.S.	(454	)	1,240		-1,694	Lower prices and volumes, and unfavorable foreign exchange effects, partly offset by reduced expenses; favorable identified items (noncash inventory valuation +386, prior quarter impairment +41)
Total	(1,651	)	536		-2,187	Prices -2,760, volume -250, expenses +350, forex -220, other -140, identified items +830
Production (koebd)	3,638		4,046		-408	Liquids -174 kbd: higher entitlements and lower downtime/maintenance, more than offset by lower demand including economic curtailments and government mandates Gas -1,406 mcfd: lower seasonal demand, higher downtime/maintenance, and lower entitlements
Downstream
U.S.	(101	)	(101	)	–	Lower margins on weaker industry refining margins and unfavorable mark-to-market derivatives, and reduced market demand, offset by lower expenses, improved manufacturing on lower downtime, and favorable identified items (noncash inventory valuation +815)
Non-U.S.	1,077		(510	)	+1,587	Lower margins on unfavorable mark-to-market derivatives and weaker industry refining margins, and lower market demand, more than offset by lower expenses, favorable foreign exchange, and favorable identified items (noncash inventory valuation +2,386, prior quarter impairment +335)
Total	976		(611	)	+1,587	Margins -2,340, market demand -240, expenses +220, forex +110, manufacturing +190, other +120, identified items +3,530
Petroleum Product Sales (kbd)	4,437		5,287		-850
Chemical
U.S.	171		288		-117	Lower margins and volumes on weaker demand partly offset by reduced expenses; favorable identified items (+61, mainly prior quarter impairment)
Non-U.S.	296		(144	)	+440	Higher margins partly offset by lower volumes on weaker demand; favorable identified items (+376, mainly noncash inventory valuation)
Total	467		144		+323	Expenses +110, volumes -170, other -50, identified items +430
Prime Product Sales (kt)	5,945		6,237		-292
Corporate and financing	(872	)	(679	)	-193	Mainly higher financing costs


Results and Volume Summary

Millions of Dollars	YTD		YTD
(unless noted)	2020		2019		Change	Comments
Upstream
U.S.	(1,901	)	431		-2,332	Lower prices; unfavorable identified item (impairment -315)
Non-U.S.	786		5,706		-4,920	Lower prices and volumes, partly offset by favorable foreign exchange effects and reduced expenses; unfavorable identified items (noncash inventory valuation -50, impairment -41, prior year tax item -487)
Total	(1,115	)	6,137		-7,252	Prices -6,400, volume -280, expenses +140, forex +210, other -30, identified items -890
Production (koebd)	3,842		3,945		-103	Liquids +35 kbd: growth (+122 kbd), lower downtime/maintenance, and higher entitlements, partly offset by lower demand including economic curtailments, divestments, and government mandates Gas -827 mcfd: growth (+201 mcfd), more than offset by divestments and lower demand including economic curtailments
Downstream
U.S.	(202	)	149		-351	Lower margins on weaker industry refining margins, and lower market demand, partly offset by improved manufacturing on lower scheduled maintenance, and lower expenses
Non-U.S.	567		46		+521	Higher margins, with favorable mark-to-market derivatives partly offset by weaker industry refining margins, improved manufacturing, and lower expenses, partly offset by reduced market demand; unfavorable identified items (-332, mainly impairment)
Total	365		195		+170	Margins -360, market demand -420, manufacturing +960, expenses +250, other +80, identified items -340
Petroleum Product Sales (kbd)	4,862		5,412		-550
Chemical
U.S.	459		155		+304	Higher margins and lower expenses partly offset by lower volumes on weaker demand; unfavorable identified items (-119, mainly impairment)
Non-U.S.	152		551		-399	Lower margins and volumes on weaker demand partly offset by lower expenses; unfavorable identified items (-90, mainly noncash inventory valuation)
Total	611		706		-95	Margins +180, expenses +190, volumes -280, other +20, identified items -210
Prime Product Sales (kt)	12,182		13,471		-1,289
Corporate and financing	(1,551	)	(1,558	)	+7	Lower corporate costs offset by higher financing costs


Cash Flow from Operations and Asset Sales excluding Working Capital

Millions of Dollars	2Q
	2020		Comments
Net income (loss) including noncontrolling interests	(1,169	)	Including ($89) million noncontrolling interests
Depreciation	4,916
Noncash inventory adjustment	(2,069	)	Including ($147) million noncontrolling interests
Changes in operational working capital	(1,460	)	Mainly seasonal reduction in payables and inventory build
Other	(218	)
Cash Flow from Operating	–
Activities (U.S. GAAP)
Asset sales	43
Cash Flow from Operations	43
and Asset Sales
Changes in operational working capital	1,460
Cash Flow from Operations	1,503
and Asset Sales excluding Working Capital

Millions of Dollars	YTD
	2020		Comments
Net income (loss) including noncontrolling interests	(1,939	)	Including ($249) million noncontrolling interests
Depreciation	10,735		Including impairment impacts
Noncash inventory adjustment	176		Including $2 million noncontrolling interests
Changes in operational working capital	(2,402	)	Mainly lower payables and inventory build
Other	(296	)
Cash Flow from Operating	6,274
Activities (U.S. GAAP)
Asset sales	129
Cash Flow from Operations	6,403
and Asset Sales
Changes in operational working capital	2,402
Cash Flow from Operations	8,805
and Asset Sales excluding Working Capital

First Half 2020 Financial Updates

During the first six months of 2020, Exxon Mobil Corporation purchased 6 million shares of its common stock for the treasury at a gross cost of $305 million. These shares were acquired to offset dilution in conjunction with the company’s benefit plans and programs. The corporation will continue to acquire shares to offset dilution in conjunction with its benefit plans and programs.

ExxonMobil will discuss financial and operating results and other matters during a webcast at 8:30 a.m. Central Time on July 31, 2020. To listen to the event or access an archived replay, please visit www.exxonmobil.com.

[expand title=”Advisories & Contact”]Cautionary Statement

Outlooks, projections, goals, targets, descriptions of strategic plans and objectives, and other statements of future events or conditions in this release are forward-looking statements. Actual future results, including financial and operating performance; the impact of the COVID-19 pandemic on results; planned capital and cash operating expense reductions and ability to meet announced reduction objectives; total capital expenditures and mix; cash flow, dividend and shareholder returns; business and project plans, timing, costs and capacities; resource recoveries and production rates; accounting and financial reporting effects resulting from market developments and ExxonMobil’s responsive actions; and the impact of new technologies, including to increase capital efficiency and production and to reduce greenhouse gas emissions and intensity, could differ materially due to a number of factors. These include global or regional changes in the supply and demand for oil, natural gas, petrochemicals, and feedstocks and other market conditions that impact prices and differentials; the outcome of government policies and actions, including actions taken to address COVID-19 and to maintain the functioning of national and global economies and markets; the impact of company actions to protect the health and safety of employees, vendors, customers, and communities; actions of competitors and commercial counterparties; the ability to access short- and long-term debt markets on a timely and affordable basis; the severity, length and ultimate impact of COVID-19 on people and economies; reservoir performance; the outcome of exploration projects and timely completion of development and construction projects; changes in law, taxes, or regulation including environmental regulations, and timely granting of governmental permits; war, trade agreements and patterns, shipping blockades or harassment, and other political or security disturbances; opportunities for and regulatory approval of potential investments or divestments; the actions of competitors; the capture of efficiencies within and between business lines and the ability to maintain near-term cost reductions as ongoing efficiencies while maintaining future competitive positioning; unforeseen technical or operating difficulties; the development and competitiveness of alternative energy and emission reduction technologies; the results of research programs; the ability to bring new technologies to commercial scale on a cost-competitive basis, including emission reduction technologies and large-scale hydraulic fracturing projects; general economic conditions including the occurrence and duration of economic recessions; and other factors discussed under the heading Factors Affecting Future Results on the Investors page of our website at www.exxonmobil.com and in Item 1A of ExxonMobil’s 2019 Form 10-K. We assume no duty to update these statements as of any future date.

Frequently Used Terms and Non-GAAP Measures

This press release includes cash flow from operations and asset sales. Because of the regular nature of our asset management and divestment program, we believe it is useful for investors to consider proceeds associated with the sales of subsidiaries, property, plant and equipment, and sales and returns of investments together with cash provided by operating activities when evaluating cash available for investment in the business and financing activities. A reconciliation to net cash provided by operating activities for 2020 periods is shown on page 7 and for 2020 and 2019 periods in Attachment V.

This press release also includes cash flow from operations and asset sales excluding working capital. We believe it is useful for investors to consider these numbers in comparing the underlying performance of our business across periods when there are significant period-to-period differences in the amount of changes in working capital. A reconciliation to net cash provided by operating activities for 2020 periods is shown on page 7 and for 2020 and 2019 periods in Attachment V.

This press release also includes earnings/(loss) excluding identified items, which are earnings/(loss) excluding individually significant non-operational events with an absolute corporate total earnings impact of at least $250 million in a given quarter. The earnings/(loss) impact of an identified item for an individual segment may be less than $250 million when the item impacts several segments. We believe it is useful for investors to consider these figures in comparing the underlying performance of our business across periods when one, or both, periods include identified items. A reconciliation to earnings is shown for 2020 and 2019 periods in Attachments II-a and II-b. Corresponding per share amounts are shown on page 1 and in attachment II-a, including a reconciliation to earnings/(loss) per common share – assuming dilution (U.S. GAAP).

This press release also includes total taxes including sales-based taxes. This is a broader indicator of the total tax burden on the corporation’s products and earnings, including certain sales and value-added taxes imposed on and concurrent with revenue-producing transactions with customers and collected on behalf of governmental authorities (“sales-based taxes”). It combines “Income taxes” and “Total other taxes and duties” with sales‑based taxes, which are reported net in the income statement. We believe it is useful for the corporation and its investors to understand the total tax burden imposed on the corporation’s products and earnings. A reconciliation to total taxes is shown as part of the Estimated Key Financial and Operating Data in Attachment I.

References to the resource base and other quantities of oil, natural gas or condensate may include estimated amounts that are not yet classified as “proved reserves” under SEC definitions, but which are expected to be ultimately recoverable. The term “project” as used in this release can refer to a variety of different activities and does not necessarily have the same meaning as in any government payment transparency reports. Further information on ExxonMobil’s frequently used financial and operating measures and other terms including “Cash flow from operations and asset sales”, and “Total taxes including sales‑based taxes” is contained under the heading “Frequently Used Terms” available through the “Investors” section of our website at www.exxonmobil.com.

LIFO

Contacts

ExxonMobil
Media Relations, 972-940-6007[/expand]

ExxonMobil reports results for second quarter 2020

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