Exxon profits drop as demand for oil dries up
NEW YORK — Profits fell at Exxon Mobil as the global pandemic began to erode oil demand.
Exxon lost $610 million in the first quarter — down 126% from the same time last year — the Irving, Texas oil giant said Friday.
Revenue was $56.16 billion, down 12% from the same quarter in 2019.
Fewer people flew or drove as the world fought to contain the spread of COVID-19, decreasing the need for jet fuel and gasoline. That resulted in oversupplied markets and unprecedented pressure on prices and margins, said CEO Darren Woods.
Despite plummeting demand, Exxon produced 4 million barrels per day of oil, up 2% from the same time last year.
“While we manage through these challenging times, we are not losing sight of the long-term fundamentals that drive our business,” Woods said. “Economic activity will return, and populations and standards of living will increase, which will in turn drive demand for our products and a recovery of the industry.”
The oil industry was facing stark challenges even before the coronavirus hit, when prices were low because of a trade war between the U.S. and China which contributed to a global economic slowdown. As lockdowns began to spread around the world during the first quarter, oil use plummeted and prices fell. Then
Saudi Arabia, in a power struggle with Russia, began flooding the market with oil, pushing prices down even further.
Exxon lost 14 cents per share, falling below the expectations of analysts polled by Factset.
It maintained a quarterly dividend of 87 cents per share, and Woods assured investors that the dividend is a priority for Exxon. “If you look at our shareholder base, about 70% of them are retail or long-term investors that look for our dividend and see that as an important source of stability in their income,” Woods said in a conference call with investors.
To take oil off the market, Exxon plans to shut in some oil-producing wells, which would reduce the company’s output by about 100,000 barrels per day, Woods said.