ExxonMobil earnings plunge 63% on falling oil

 30 Apr 2016 - 2:29

ExxonMobil earnings plunge 63% on falling oil
The logo of ExxonMobil Corporation is shown on a monitor above the floor of the New York Stock Exchange in New York.


New York: US energy giant ExxonMobil reported yesterday that its first-quarter earnings dived 63 percent to $1.8bn due to plunging oil prices.

ExxonMobil’s upstream division, usually a cash cow that explores for and produces petroleum, suffered a $76m loss. That was partially offset by higher earnings in the oil giant’s chemical division.
Revenues tumbled 28 percent to $48.7bn.
The results are the latest in a wave of petroleum industry results to reflect the battering effect of low prices. Earlier this week, both BP and ConocoPhillips reported losses for the quarter.
ExxonMobil said its upstream business boosted oil and gas production by 1.8 percent from the year-ago period to 4.3 million barrels per day.
Oil companies have slashed capital spending in response to low prices. However, in some cases, they have been able to keep production high as suppliers and oil-services companies have charged less for services. ExxonMobil’s earnings translated into 43 cents per share, 12 cents more than analyst expectations.
Standard & Poor’s had stripped ExxonMobil of its triple A rating on Tuesday, saying the oil giant’s rising debt and weaker earnings outlook meant it no longer qualified for the highest credit grade.
The one-notch cut was the latest ripple effect on the oil industry from crashing crude prices, which have forced a number of smaller producers into bankruptcy.
ExxonMobil, the largest US oil company and the world’s fifth largest, had held the triple-A rating since 1930. The downgrade leaves just two US companies with triple-A credit ratings, Microsoft and Johnson & Johnson.
S&P noted that ExxonMobil’s capital debt has more than doubled in recent years as it executes a number of major exploration and production projects to increase oil and gas output capacity.
The ratings agency also expects ExxonMobil will continue to return large sums to shareholders through dividends and stock buybacks, further pressuring its financial position.
“Despite the favorable effect of lower service costs and improved efficiencies, we believe that maintaining production and replacing reserves will eventually require higher spending,” S&P said.