(Noted News) — Exxon has had a rough 2020. In August, they were outed from the Dow Jones Index after 92 years, losing any remainder of their coveted status in the American industry. Now the once invincible oil giant, formerly known as Standard Oil, has posted their third straight quarterly loss.
A year ago, Exxon posted a profit of $3.17 billion in their third quarter of 2019, but this year, they have posted a loss of $680 million, adding on to losses of roughly $1.7 billion in the first 6 months of the year.
The company has further plans to cut down on expenses and their workforce; Earlier in the week, Exxon said it expected to shed at least $10 billion and 15% of its workforce, with job cuts in the US, Europe, and Australia.
The amount of jobs lost adds up to about 14,000 worldwide, including job losses from retirements, restructurings, and performance-based exits. This will eat away at its 2019 estimate of 75,000 employees worldwide.
In their earnings report, chairman and CEO Darren Woods claimed everything was going according to plan.
“We remain confident in our long-term strategy and the fundamentals of our business, and are taking the necessary actions to preserve value while protecting the balance sheet and dividend.”
“We are on pace to achieve our 2020 cost-reduction targets and are progressing additional savings next year as we manage through this unprecedented down cycle.”
Being nixed from the Dow and now a disastrous 2020 come following previous struggles in recent years. In 2014 Exxon and Russian petroleum company Rosneft formed a joint venture to explore and research new oil sources in Siberia.
However, this partnership went sour after being hit with US sanctions, forcing Exxon to withdraw from the project and leaving Rosneft to go it alone. Withdrawing from the Russian exploration project cost roughly $700 million in the wasted investment and the costs of leaving the area.
Rosneft said in a statement that they “will continue the independent development of these projects and will support the return of ExxonMobil to projects with the appearance of such legislative capacity. Work with ExxonMobil on projects that are not subject to current restrictions, as well as on prospective projects will be continued.”
Following getting booted out of Russia, Exxon began focusing on US shale fields in the Permian Basin of Texas and New Mexico, as well as the oceans of Guyana where considerable amounts of oil have been found.
So far, these new ventures have not paid off, most notably because of the massive drop in demand for oil following the coronavirus-induced shut down of the world economy.
Following the market correction of March 2020, crude oil dipped into negative territory and has yet to make even a halfway retracement. The supply and demand curve continues to trend into bleak territory for the oil industry.
“The impact of COVID-19 on the demand for Exxon Mobil’s products has increased the urgency of the ongoing efficiency work,” Exxon said in a statement.
“However, significant actions are needed at this time to improve cost competitiveness and ensure the company manages through these unprecedented market conditions.”
Exxon is not alone in their oil industry woes; In the same week, despite managing to squeeze out a profit, Chevron recorded a 57% drop in revenue compared to last year. Chevron is also in the midst of layoffs, cutbacks, and divestments.
Analysts view Chevron’s situation as less serious than Exxon’s given their stable financials.
“The company’s strong balance sheet and liquidity position supports its dividend during this difficult period. We view the company as a defensive holding in a challenging industry,” Jennifer Rowland of Edward Jones said.
“Chevron generated enough cash flow to cover its capital spending and had only a modest deficit after funding its dividend.”
In a rush to raise cash, Chevron also unloaded a $735 million worth of Appalachian shale assets to oil company EQT Corp.
In 1998, Exxon merged with Mobil in a $73.7 billion merger agreement to form the new company, “Exxon Mobil Corp.” This was the largest corporate merger in history at the time when Exxon was the biggest energy company in the world, and Mobil was the second-biggest oil company in the US.
The famous “Esso” gas stations are an acronym for Exxon’s former name, Standard Oil, known as “S.O”, at the time.