Exxon Posts Third Consecutive Quarterly Loss for First Time -- Update
By Christopher M. Matthews
Exxon Mobil Corp. posted its third consecutive quarterly loss
for the first time on record Friday and disclosed that it may write
down the value of natural-gas assets worth as much as $30 billion,
as the coronavirus pandemic continues to pressure the world's
biggest oil companies.
The Texas oil giant reported a loss of $680 million in the third
quarter compared with a profit of $3.17 billion during the same
period last year.
"We are on pace to achieve our 2020 cost-reduction targets and
are progressing additional savings next year as we manage through
this unprecedented down cycle," Exxon Chief Executive Darren Woods
said in a news release.
Rival Chevron Corp. on Friday posted a third-quarter loss of
$207 million compared with a profit of $2.58 billion in the same
quarter last year. The company reported a loss of $8.27 billion for
the second quarter.
The results make clear that the pandemic continues to weigh on
the industry despite a modest economic recovery and rebound in
demand for oil and gas.
On Thursday, Exxon said it could cut as much as 15% of its
global workforce, or about 14,000 jobs, as the struggling oil
company tries to cut costs and survive the Covid-19-led global
recession. In all, big oil producers and services firms are
collectively shedding more than 50,000 jobs.
"The world's economy continues to operate below pre-pandemic
levels, impacting demand for our products which are closely linked
to economic activity," Chevron CEO Michael Wirth said Friday.
Exxon's disclosure Friday that it could take a huge write-down
comes after months of pressure from analysts and others to do
Lower oil and gas prices brought on by the pandemic and
uncertainty over the pace of the transition to lower-carbon energy
have caused major oil companies to question the value of their
assets. Exxon had stood out among its peers this year for resisting
Royal Dutch Shell PLC said earlier this year it would write down
the value of its assets by up to $22 billion because of lower
energy prices and BP PLC is writing down as much as $17.5 billion.
Last year, Chevron said it would cut the value of its assets by $10
Exxon said Friday it is assessing the value of North American
dry gas assets as part of its corporate development plan. Spokesman
Casey Norton said Friday that the impairment of gas assets with a
carrying value of $25 billion to $30 billion hadn't been completed
and would be considered by the board later this year. Mr. Norton
said the impairment doesn't indicate changes to Exxon's long-term
price views and isn't a reaction to short-term price
The company also said it will reduce its capital expenditures to
between $16 billion and $19 billion next year. Exxon had planned to
spend $33 billion in 2020, but cut its capital expenditures to $23
billion after the pandemic took hold.
As The Wall Street Journal previously reported, several oil and
gas accounting experts have alleged that Exxon's reticence to
adjust the value of assets on its balance sheet amounts to
accounting fraud in a series of complaints filed to U.S.
authorities. By their estimates, Exxon should have taken a $44
billion impairment loss this year and a corresponding $56 billion
reduction of its reported assets on its balance sheet in the second
The group, which filed a whistleblower complaint with the
Securities and Exchange Commission, has singled out Exxon's
acquisition of XTO Energy Inc., a natural-gas driller it purchased
for $31 billion a decade ago, along with other assets.
Exxon has rebutted the criticism of its write-down practices,
saying that the company is in compliance with accounting rules and
SEC regulations about disclosures to investors.
Exxon wrote down the value of U.S. shale gas assets by $2.5
billion in 2017. Critics of the company, including some analysts,
have questioned whether that was sufficient, noting the price of
the XTO deal.
Exxon has long played down questions about its lack of asset
write-downs, saying it is able to avoid them because it is
extremely conservative in initially booking the value of new fields
and wells and doesn't respond to short-term commodity-price
fluctuations. Before 2016, Exxon had never recognized an asset
impairment under U.S. accounting rules implemented in the
Dave Sebastian contributed to this article.
Write to Christopher M. Matthews at
(END) Dow Jones Newswires
October 30, 2020 09:15 ET (13:15 GMT)
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