10-QPeriod: Q2 FY2020

EXXON MOBIL CORP Quarterly Report for Q2 Ended Jun 30, 2020

Filed August 5, 2020For Securities:XOM

Summary

ExxonMobil Corporation reported a net loss attributable to shareholders of $1.08 billion ($0.26 per diluted share) for the second quarter of 2020, a significant decrease compared to the $3.13 billion profit ($0.73 per diluted share) in the same period of 2019. This downturn was primarily driven by substantial declines in upstream realizations due to drastically lower commodity prices, exacerbated by the COVID-19 pandemic's impact on global demand. While the Downstream and Chemical segments showed some resilience, particularly due to favorable inventory adjustments and reduced expenses, they could not offset the upstream segment's weakness. Despite the challenging operating environment, ExxonMobil took proactive steps to manage its financial position. The company significantly reduced its capital and exploration expenditures, and also issued substantial amounts of long-term debt to bolster liquidity, increasing its total debt and debt-to-capital ratio. Management anticipates continued lower earnings and operating cash flow compared to 2019 unless industry conditions improve significantly in the latter half of the year. The company is closely monitoring long-term asset impairment risks and potential reductions in proved reserves.

Financial Highlights

43 data points
Beta

Revenue

$32.28B

Net Income

-$1.08B

-3.3% Net Margin

EPS (Diluted)

$-0.26

Total Assets

$361.50B

Cash & Equivalents

$12.58B

Free Cash Flow

-$4.42B

Financial Statements
Beta
Revenue$32.28B
SG&A Expenses$2.41B
Operating Expenses$34.24B
Interest Expense$317.00M
Net Income-$1.08B
EPS (Basic)$-0.26
EPS (Diluted)$-0.26
Shares Outstanding (Basic)4.27B

Key Highlights

  • 1ExxonMobil reported a net loss of $1.08 billion for Q2 2020, a significant decline from a $3.13 billion profit in Q2 2019.
  • 2Earnings per diluted share for Q2 2020 were a loss of $0.26, compared to earnings of $0.73 in Q2 2019.
  • 3The Upstream segment experienced a loss of $1.65 billion in Q2 2020, primarily due to lower oil and gas realizations.
  • 4Downstream segment earnings increased to $976 million in Q2 2020, aided by a favorable inventory adjustment.
  • 5Chemical segment earnings rose to $467 million in Q2 2020, driven by higher margins and lower expenses.
  • 6The company significantly reduced capital and exploration expenditures to $5.3 billion in Q2 2020, down from $8.1 billion in Q2 2019.
  • 7Total debt increased to $69.5 billion at the end of Q2 2020, up from $46.9 billion at year-end 2019, with the debt-to-capital ratio rising to 27.1%.

Frequently Asked Questions

The primary driver for the substantial decrease in net income was the severe downturn in commodity prices for crude oil and natural gas, significantly impacting the Upstream segment's profitability. This was compounded by reduced demand for petroleum products due to the global COVID-19 pandemic and associated economic slowdown.

ExxonMobil took several measures to strengthen its liquidity. This included a significant reduction in capital and exploration expenditures, as well as issuing substantial amounts of long-term debt, which increased its total debt load. The company also maintained access to committed credit lines.

The company anticipates that unless industry conditions, particularly commodity prices and demand, improve significantly in the second half of the year, earnings and operating cash flow are expected to be lower than in 2019. This challenging environment could lead to further project deferrals, idling of capacity, and potential asset impairments or reductions in proved reserves.

Yes, in the first half of 2020, the company recognized after-tax impairment charges totaling $836 million, including goodwill impairments and other asset impairments, primarily related to the Upstream segment, due to sharp declines in commodity prices and market capitalization.