(Corrects the previously reported annual loss to net annual loss of $ 22.4 billion)
By Jennifer Hiller
HOUSTON, February 2 (Reuters) – Exxon Mobil Corp on Tuesday reported its first annual loss as a public company, while the pandemic COVID-19 hammered energy prices and reduced the value of its shale gas properties by more than $ 20 billion.
Exxon last year cut spending on new projects by almost a third, outlined plans to cut up to 15% of its workforce, adding $ 21 billion to its debt to cover its spending and restructuring.
The changes come amid “the most challenging market conditions Exxon has ever experienced,” said Chief Executive Darren Woods, and in time will reduce costs by $ 6 billion a year compared to 2019.
The company reported an annual net loss of $ 22.4 billion for 2020, on the write-off and losses in oil production and refining, compared to an annual profit of $ 14.34 billion in 2019.
Exxon’s shares rose 2% to $ 45.80% at the opening of the market.
OILMAN JOINS THE COUNCIL
The company continues to be criticized by environmentalists and activist investors who are pushing for a board review and a transition strategy to cleaner fuels. Exxon reacted against its calls for clean energy expertise, naming the former head of Malaysian state oil company Tan Sri Wan Zulkiflee Wan Ariffin for its advice. It is in discussion with other candidates, the company added.
Other major oil companies recorded losses in the year, as travel restrictions related to the pandemic cut fuel demand and generated huge write-offs. Rivals BP and Chevron recorded annual losses.
Royal Dutch Shell reports financial results on Thursday.
Exxon posted a net loss of $ 20.2 billion, or $ 4.70 per share, in the fourth quarter ended December 31, compared to a profit of $ 5.69 billion, or $ 1.33 per share, one year ago. Excluding impairment and other charges, the company earned 3 cents per share, exceeding analysts’ average expectation of a gain of one cent, according to data from IBES Refinitiv.
“The turnaround story will take some time,” said Biraj Borkhataria, an analyst at RBC Capital Markets, noting that the company is not yet covering its dividends and capital expenditures with money from operations.
LOWER OIL OUTPUT AND REFINING
Exxon’s oil and gas production was 3.7 million barrels of oil and gas per day in the quarter, down 8% compared to the previous year.
Exploration and production, Exxon’s largest business, lost $ 18.5 billion in the fourth quarter to losses on natural gas assets, compared with a profit of $ 6.1 billion the previous year.
Its chemicals business profited $ 691 million at better margins, in part from lower oil prices, compared with a loss of $ 355 million a year ago. Refining lost $ 1.2 billion, compared to a profit of $ 898 million last year, with weak margins and lower production, as the pandemic limited global travel.
The write-off reveals the size of the miscalculation that the company made in 2010, when it paid US $ 30 billion for the United States shale oil and gas producer XTO Energy. The write-off also included properties in Argentina and Canada.
The move to add a board member comes as Exxon seeks to improve its environmental credentials while Hedge Engine No. 1 leads a proxy fight to nominate four candidates for the Exxon board.
“ExxonMobil shareholders deserve advice that works proactively to create long-term value, not defensively in the face of deteriorating returns and the threat of losing their seats,” said Engine No.1 in a statement.
On Monday, Exxon said it would invest $ 3 billion in lower-emission solutions by 2025 and created a business that will focus on commercializing its carbon capture technology.
(Reporting by Jennifer Hiller in Houston and Shariq Khan in Bengaluru; Editing by Will Dunham, Sriraj Kalluvila, Kirsten Donovan and Barbara Lewis)
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