In a First, Exxon Posts Three Quarterly Losses in a Row
In its third quarter results released Friday, ExxonMobil announced losses of about $680 million, and it flagged a major risk for the long-term value of its US. onshore gas assets, which could face steep writedowns.
The firm will be assessing about $25-30 billion in shale gas assets that it acquired when it purchased XTO Energy in 2010. U.S. Henry Hub gas prices have fallen in recent months, driven down by low demand caused by the COVID-19 slowdown, and are nowhere near the levels seen at the time of the XTO purchase. The process of evaluating the accurate value of these assets will occur in the fourth quarter.
Exxon is also cutting its capital expenditures by $10 billion this year, and it plans to cut an additional $7 billion from its capex budget in 2021. However, its plans for one offshore development are still on course: Guyana's Stabroek block, a promising frontier area where Exxon has already struck oil with 18 successful exploration wells. It recently announced that it has funded the Payara project off Guyana, its third major development in the region, which is expected to produce about 220,000 boepd beginning in 2024. Exxon's estimated recoverable resource in the region comes to about nine billion barrels of oil equivalent.
The results follow Thursday's announcement that Exxon plans to lay off about 14,000 employees and contractors worldwide, including 1,900 in the United States (concentrated at its Houston headquarters).The oil giant's recent quarterly losses are its first in 30 years, and it has never before lost money for three quarters in a row.
Analysts have suggested that if Exxon wished to raise cash in the short term, it could sell a share of its promising Guyana assets to another oil major or investor. The first oil from Exxon's Liza well in the Stabroek block shipped early this year, but the region's full revenue potential will take time to realize.