Low Crude Oil Price Erodes ExxonMobil, Chevron’s Q3 Earnings
The plummeting prices of crude oil in the international market have impacted negatively on the earnings of ExxonMobil Corporation and Chevron Corporation, according to their third quarter 2016 results released at the weekend.
Chevron’s average sales price per barrel of crude oil and natural gas liquids was $37 in third quarter 2016, down from $42 a year ago.
The results showed that ExxonMobil’s global output for the quarter declined three per cent to 3.8 million oil-equivalent barrels per day compared with a year ago, due to unplanned downtime, primarily in Nigeria.
While ExxonMobil Corporation announced estimated third quarter 2016 earnings of $2.7 billion, compared with $4.2 billion a year earlier, Chevron reported earnings of $1.3 billion for third quarter 2016, compared with earnings of $2.0 billion in the third quarter of 2015.
According to ExxonMobil, its third quarter results reflect lower refining margins and commodity prices.
However, ExxonMobil’s Chairman and Chief Executive Officer, Rex Tillerson stated that the company’s integrated business has continued.
“While the operating environment remains challenging, the company continues to focus on capturing efficiencies, advancing strategic investments, and creating long-term shareholder value,” he argued.
During the quarter, ExxonMobil’s upstream earnings were $620 million as volumes for the quarter declined three per cent to 3.8 million oil-equivalent barrels per day compared with a year ago, due to unplanned downtime, primarily in Nigeria, and field decline partially offset by increased production from recent project start-ups.
Third quarter Chemical earnings of $1.2 billion, comparable with prior year results, reflect higher maintenance costs, partially offset by increased specialty product sales.
During the quarter, capital and exploration expenses were reduced by 45 percent to $4.2 billion.
During the period under review, Chevron Corporation reported earnings of $1.3 billion, compared with earnings of $2.0 billion in the third quarter of 2015.
Sales and other operating revenues in third quarter 2016 were $29 billion, compared to $33 billion in the year-ago period.
“Third quarter results, though down from a year ago, reflect an improvement from the first two quarters of this year,” said Chairman and CEO John Watson.
“We have made progress toward our goals of lowering the cash breakeven in our upstream business and getting cash balanced,” Watson added.
“Capital spending and operating and administrative expenses have been reduced by over $10 billion from the first nine months of 2015 as a result of a series of deliberate actions we have taken,” Watson said.
Worldwide net oil-equivalent production was 2.51 million barrels per day in third quarter 2016, compared with 2.54 million barrels per day from a year ago.
Production increases from major capital projects, shale and tight properties, and base business were more than offset by normal field declines, the effect of asset sales, maintenance-related downtime primarily reflecting a major planned turnaround at Tengizchevroil, the effects of civil unrest in Nigeria and production entitlement effects in several locations.
By Ejiofor Alike