ExxonMobil Suffers $22.4 Billion Annual Loss, Sticks to Low Capex Plan
Like other energy giants, Exxon Mobil Corporation (NYSE:XOM) (Irving, Texas) was clobbered last year by low fuel demand and oil prices in a COVID-19-ravaged world, posting its first annual loss in decades on Tuesday. ExxonMobil had slashed its capital spending by roughly a third to $21.3 billion last year. For this year, capital expenditures are likely to fall at the low end of its $16 billion-to-$19 billion guidance range.
Industrial Info is tracking $93.6 billion in project activity by ExxonMobil.
ExxonMobil reported a net loss of $22.4 billion for 2020, compared with a $14.3 billion profit in 2019. For fourth-quarter 2020, the loss was $20.07 billion, compared with a $5.69 billion profit in fourth-quarter 2019.
"The past year presented the most challenging market conditions ExxonMobil has ever experienced," said Chief Executive Officer Darren Woods in the company's earnings release.
ExxonMobil's upstream exploration and production segment reported an $18.5 billion loss in the fourth quarter, compared with a $6.1 billion profit a year earlier.
Its downstream refining business lost $1.2 billion, compared with earning $898 million a year earlier, in large part due to lower fuel demand amid the COVID-19 pandemic. Industry fuels margins improved slightly from the third quarter, but remained near historic lows driven by market oversupply and high product inventory levels, the company said.
However, the company's chemicals business earned $691 million during the just-ended quarter, a positive swing from its $355 million loss in fourth-quarter 2019. Chemical sales volumes were even with the third quarter, according to ExxonMobil, while industry margins strengthened on continued strong packaging demand, automotive and durables market recovery, and industry supply disruptions.
Looking to 2021, planned capital expenditure levels will hinge on oil prices as well as refining and chemical margins, Woods said during an earnings conference call with industry analysts. ExxonMobil is prioritizing its Guyana, Brazil, Permian and high-return chemical projects, he said.
"The Brent (oil) price required for $16 billion (of capital expenditures), which is the low end of our guidance, and closer to what I expect our actual spend to be in 2021, is $50 a barrel," Woods said. "With downstream and chemical margins at the bottom of the 10-year historical range, we can fund our highest-return investments in Guyana, the Permian and our chemical business and again pay down debt at prices just above $50 per barrel. If downstream and chemical margins were at their 10-year averages, Brent breakeven prices (for the $16 billion in capital spending) would be roughly $5 a barrel lower."
He noted that oil prices and downstream and chemical margins currently were above ExxonMobil's breakeven points to achieve $16 billion in capital expenditures.
Woods stressed the importance of long-term capital investments, saying project startups from 2021 to 2025 are expected to drive more than 40% of the company's cash flow by 2025.
Industrial Info is tracking active offshore Guyana oil and gas production projects worth more than $3.1 billion. Construction is underway on the Liza II floating production, storage and offloading (FPSO) project. Part of the Liza Field Development, the project will install a second converted very large crude carrier (VLCC) tanker into a FPSO moored 190 kilometers (118 miles) east of the Guyana coast. The crude oil and natural gas project will have a processing capacity of 220,000 barrels per day ( BBL/d) and storage capacity of 2 million barrels. For more information, see Industrial Info's project report. Click here for all of ExxonMobil's offshore Guyana projects.
In the Permian Basin, ExxonMobil's full-year 2020 production averaged 367,000 oil-equivalent barrels (BOE) per day (BOE/d) . The company is targeting 700,000 BOE/d from the Permian by 2025.