Oil Companies Are Feeling The Pain
In addition to reporting that Exxon had its 3rd quarter in a row with a loss, it disclosed that it plans write down up to $30 billion in natural gas. The oil giant reported a loss of $680 million in the 3rd quarter compared with a profit of $3.17 billion for 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.
Others began to report on their falling revenue as well. Chevron on Friday posted a 3rd quarter loss of $207 million compared with a profit of $2.58 billion in the same quarter last year. while BP PLC lost $307 million.
On Thursday, Exxon said it could cut as much as 14,000 jobs (15% of workforce) as it tries to cut costs and survive the Covid-19-led global recession. In all, big oil producers are letting go of workers for more than 50,000 jobs.
Chevron who just bought Noble Energy Inc. for $5 billion, said it will lay off about 25% of Noble’s employees, make cut its capital spending by $4 billion, and also plans to lay off as much as 15% of its own staff.
“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.
Shell 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 is writing down as much as $17.5 billion. Last year, Chevron said it would cut the value of its assets by $10 billion.
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. (Experts say Exxon should take a $44 billion impairment loss this year and a corresponding $56 billion reduction of its reported assets in the 2nd quarter).
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.
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.