Released August 10, 2020 | GALWAY, IRELAND
en
Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Some of the world's largest oil and gas companies, Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, The Netherlands), ExxonMobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) (San Ramon, California) have recorded second quarter losses for 2020 amounting to almost $28 billion.
The COVID-19 pandemic, which has devastated crude oil prices and slashed global demand, was cited as the key factor by all of the companies. Shell reported the biggest loss by far at $18.3 billion, followed by Chevron with $8.3 billion and ExxonMobil at $1.1 billion.
Shell's second quarter was down sharply from a net profit of $2.7 billion in the first quarter this year and the $3 billion earned for the same period last year. Shell was forced to write down the value of its oil and gas assets through a post-tax impairment charge of $16.8 billion. The company confirmed that it is still on track to deliver on the reduction in underlying operating expenses by $3 to $4 billion by the end of Q1 2021, compared with 2019 levels. There will be significant cuts to exploration & production (E&P) spending.
Ben Van Beurden, Shell's chief executive officer, commented: "These are extraordinary times, challenging times for our business as for many others. And you will see the effect of COVID-19 and the overall global economic weakness, and what they have meant for Shell in the second quarter. And while there is nothing Shell can do about the times we find ourselves in, we can always run our business well. Keep it resilient."
He added: "For example, we have reduced our exploration budget by some $600 million for 2020, which partly appears in our capital expenditure numbers and partly in operating expenses. In agreement with partners and governments, we plan to drill 22 exploration wells this year, compared with 77 originally planned. While reducing the spend, we have continued adding resources to our growth funnel. In addition to stopping and deferring projects, we have rethought how we can become more efficient in deploying capital. In Shales, for example, we have reduced activity in various basins, taking advantage of the short cycles and flexibility that they allow. With all these initiatives we are on track to achieve the $5 billion reduction in cash capital expenditure from our originally planned levels for this year."
Chevron lost $8.3 billion in Q2, slashing the value of assets including those in Venezuela, on expectations that commodity prices will remain lower for longer. "The economic impact of the response to COVID-19 significantly reduced demand for our products and lowered commodity prices," explained Michael K. Wirth, Chevron's chairman of the board and chief executive officer. "Given the uncertainties associated with economic recovery, and ample oil and gas supplies, we made a downward revision to our commodity price outlook which resulted in asset impairments and other charges. Financial results may continue to be depressed into the third quarter 2020."
ExxonMobil's $1.1 billion loss in Q2 saw the company continue to roll back on its once ambitious plans to spend $30 billion a year on E&P. It has cut the number of oil rigs it operates in the Permian Basin in the U.S. by half to 30 and will reduce that by half again by the year's end. Work will also be "delayed or curtailed" at the company's leading projects, including deepwater oil in Guyana and Brazil, Permian Basin shale and LNG gas exports from Mozambique and Papua New Guinea.
Darren W. Woods, chairman and chief executive officer, said: "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. The progress we've made to date gives us confidence that we will meet or exceed our cost-reduction targets for 2020. In April, Industrial Info reported that ExxonMobil was cutting 2020 capital spending by $10 billion, or 30%. For additional information, see April 8, 2020, article - ExxonMobil Lops $10 Billion Off Planned 2020 Capex, Targets Permian Basin.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Our European headquarters are located in Galway, Ireland. Follow IIR Europe on: Facebook - Twitter - LinkedIn For more information on our European coverage send inquiries to info@industrialinfo.eu or visit us online at Industrial Info Europe.
The COVID-19 pandemic, which has devastated crude oil prices and slashed global demand, was cited as the key factor by all of the companies. Shell reported the biggest loss by far at $18.3 billion, followed by Chevron with $8.3 billion and ExxonMobil at $1.1 billion.
Shell's second quarter was down sharply from a net profit of $2.7 billion in the first quarter this year and the $3 billion earned for the same period last year. Shell was forced to write down the value of its oil and gas assets through a post-tax impairment charge of $16.8 billion. The company confirmed that it is still on track to deliver on the reduction in underlying operating expenses by $3 to $4 billion by the end of Q1 2021, compared with 2019 levels. There will be significant cuts to exploration & production (E&P) spending.
Ben Van Beurden, Shell's chief executive officer, commented: "These are extraordinary times, challenging times for our business as for many others. And you will see the effect of COVID-19 and the overall global economic weakness, and what they have meant for Shell in the second quarter. And while there is nothing Shell can do about the times we find ourselves in, we can always run our business well. Keep it resilient."
He added: "For example, we have reduced our exploration budget by some $600 million for 2020, which partly appears in our capital expenditure numbers and partly in operating expenses. In agreement with partners and governments, we plan to drill 22 exploration wells this year, compared with 77 originally planned. While reducing the spend, we have continued adding resources to our growth funnel. In addition to stopping and deferring projects, we have rethought how we can become more efficient in deploying capital. In Shales, for example, we have reduced activity in various basins, taking advantage of the short cycles and flexibility that they allow. With all these initiatives we are on track to achieve the $5 billion reduction in cash capital expenditure from our originally planned levels for this year."
Chevron lost $8.3 billion in Q2, slashing the value of assets including those in Venezuela, on expectations that commodity prices will remain lower for longer. "The economic impact of the response to COVID-19 significantly reduced demand for our products and lowered commodity prices," explained Michael K. Wirth, Chevron's chairman of the board and chief executive officer. "Given the uncertainties associated with economic recovery, and ample oil and gas supplies, we made a downward revision to our commodity price outlook which resulted in asset impairments and other charges. Financial results may continue to be depressed into the third quarter 2020."
ExxonMobil's $1.1 billion loss in Q2 saw the company continue to roll back on its once ambitious plans to spend $30 billion a year on E&P. It has cut the number of oil rigs it operates in the Permian Basin in the U.S. by half to 30 and will reduce that by half again by the year's end. Work will also be "delayed or curtailed" at the company's leading projects, including deepwater oil in Guyana and Brazil, Permian Basin shale and LNG gas exports from Mozambique and Papua New Guinea.
Darren W. Woods, chairman and chief executive officer, said: "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. The progress we've made to date gives us confidence that we will meet or exceed our cost-reduction targets for 2020. In April, Industrial Info reported that ExxonMobil was cutting 2020 capital spending by $10 billion, or 30%. For additional information, see April 8, 2020, article - ExxonMobil Lops $10 Billion Off Planned 2020 Capex, Targets Permian Basin.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Our European headquarters are located in Galway, Ireland. Follow IIR Europe on: Facebook - Twitter - LinkedIn For more information on our European coverage send inquiries to info@industrialinfo.eu or visit us online at Industrial Info Europe.
