Exxon Mobil Corp. reported its second straight quarterly loss Friday, with company executives comparing the pandemic-fueled drop-off in oil demand to declines during the 1970s energy crisis.
The Irving-based oil giant lost $1.08 billion during the three-month period that ended June 30, 77% worse than the $610 million that it lost the preceding quarter. That quarterly loss was Exxon’s first in 32 years.
“Absolute demand fell to levels we haven’t seen in nearly 20 years,” Exxon senior vice president Neal Chapman told investors in a conference call. “We’ve never seen a decline with this magnitude and pace before, even relative to the historic periods of demand volatility following the global financial crisis as far back as the 1970s oil and energy crisis.”
Exxon brought in $32.6 billion in revenue in the second quarter, steeply lower than the $69 billion for the same period a year earlier. Through the first six months of 2020, Exxon’s revenue totals $88.8 billion, down 33% from $132.7 billion last year.
The company said it didn’t expect bounce-backs in demand until later this year for gasoline and diesel, and as late as next year for jet fuel.
The first half of this year, especially the just-completed quarter, was incredibly rough for the oil industry. Before the pandemic, oil producers had to pump out 100 million barrels a day globally to keep prices steady. But when prices dropped and people stopped traveling, global demand fell to around 92 million barrels a day.
At the same time, an oil price war broke out between Russia and Saudi Arabia when Russia refused a request by the Organization of the Petroleum Exporting Countries to cut production. By March 23, oil prices had fallen to $21 a barrel. Prices even turned briefly negative on April 20, something the industry had never seen.
Oil prices have since recovered to around $40 a barrel — 30% lower than a year ago.
Bud Weinstein, an economist and associate director of Southern Methodist University’s Maguire Energy Institute, said Exxon’s results weren’t all doom and gloom.
“Considering how bad the economy was in the second quarter, that’s not a bad earnings report,” he said.
Regardless of what happens, Exxon’s holdings in the Permian Basin, the nation’s most prolific shale play, position it for long-term success, Weinstein said.
Exxon, which earlier this year cut back production in the Permian, said it would continue to idle rigs in the oil-rich area of West Texas, from 30 operating now to 10 to 15 by the end of the year.
The company’s oil-equivalent production was down about 7% year-over-year to 3.6 million barrels a day.
Exxon plans to reduce operating expenses, including management positions and other overhead costs, Chapman said.
Despite the challenging quarter, Chapman told investors he was optimistic about Exxon’s future.
“What we’ve seen today will fundamentally push this industry to do things more efficiently and take structural costs out of construction in a way that we have not been able to,” he said.
Weinstein also sees a brighter future, once a COVID-19 vaccine is available or people practice more virus-resistant behaviors.
“The demand for petroleum-related products is going to increase because that goes hand in hand with the economy,” Weinstein said. “We will see a price recovery. As the global economy recovers, prices will rebound.”
Exxon has been the largest public company in Dallas-Fort Worth for nearly three decades, reporting $255.6 billion in revenue last year. It has about 75,000 employees.
