Exxon Mobil Corp. and Chevron Corp. posted the worst losses in a generation after the pandemic and a global crude glut combined to batter almost every part of their businesses.
Exxon’s $1.1 billion second-quarter loss was the deepest in the company’s modern history. A collapse in crude prices bled the company’s production division while Covid-19 lockdowns lowered demand for everything from jet fuel to plastic wrap, hobbling the company’s refining and chemical units.
Chevron recorded its weakest performance in at least three decades and warned that the global pandemic wreaking havoc upon energy markets may continue to drag on earnings. The explorer plans to curtail the equivalent of 5% of its worldwide output during the current quarter and backtracked on plans to massively ramp up production from its prized Permian Basin holdings.
Oil has become the poorest-performing sector of U.S. equity markets as a confluence of economic, political and structural threats coalesce to imperil the very foundations of the petroleum industry. Sweeping layoffs, budget cuts and project cancellations haven’t been enough to arrest the industry’s decline as fleeing investors made energy the worst investment in the S&P 500 Index this year.
Without the massive trading operations that shielded European oil explorers such as Royal Dutch Shell Plc and Total SE from losses, Chevron was exposed to the full force of this year’s oil price rout. Notably, Exxon’s nascent trading foray “experienced unfavorable mark-to-market derivative impacts,” the company said.
Exxon generated zero cash from operating activities during the quarter, according to a statement on Friday.
Actionable Items
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