Exxon, Chevron earnings plunge on lower oil prices

Exxon reported quarterly profits of $3.2 billion. (GETTY IMAGES/AFP)
Updated 02 November 2019

Exxon, Chevron earnings plunge on lower oil prices

  • The companies have pumped heavy investment into the Permian Basin

NEW YORK: US oil giants Exxon Mobil and Chevron have reported a drop in their third-quarter profits on lower oil prices, even as increased investment in US shale projects boosted output.

The companies have pumped heavy investment into the Permian Basin, a shale-rich region in Texas and New Mexico drawing considerable interest due to newer technologies that have made developing unconventional shale resources profitable.

These efforts enabled Exxon and Chevron, the two biggest US oil companies, to increase overall oil and gas production in the quarter ending September 30.

But results were dented by a retreat in crude oil prices during the three-month period, as signs of a slowing global economy amplified worries about a glut
of supply.

US oil prices traded in the $50-$60 a barrel range for much of the quarter, down about $15 from the previous year.

Exxon reported quarterly profits of $3.2 billion, plunging by 49.2 percent from the year-ago period, as revenues fell 15.1 percent to $65 billion.

CEO Darren Woods said that the company’s ramp-up in the Permian was running ahead of schedule, saying “we are making excellent progress on our long-term growth strategy.”

At Chevron, net profits were $2.6 billion, which was 36.2 percent below the same period of 2018. Revenues were $36.1 billion, a 17.9 percent decline.

“Third quarter earnings and cash flow were solid, but down from our very strong results of a year ago,” said Chevron CEO Michael Wirth.

“Lower crude oil and natural gas prices more than offset a three percent increase in net oil-equivalent production from last year’s third quarter.”

Also on Friday, Royal Dutch Shell faced a torrent of criticism from analysts for warning of possible delays to its $25 billion share buyback program, with some saying the move had undermined the credibility of the oil giant’s management.

Shell, the world’s second-largest listed oil and gas company, saw its shares close more than 4 percent lower on Thursday, wiping out $10 billion of its market value.

The oil giant had earlier reported stronger-than-expected third-quarter profits which were, however, overshadowed by CEO Ben van Beurden’s warning about shareholder returns.

“The prevailing weak macroeconomic conditions and challenging outlook inevitably create uncertainty about the pace of reducing gearing to
25 percent and completing the share buyback program within the 2020 timeframe,” van Beurden said.

“The planned $25 billion share buyback before end-2020 was acknowledged by the CEO as a ‘statement of the obvious.’ We agree but it had a predictable and in our view unnecessary impact,” UBS analyst Jon Rigby said in a note.

The comments, Rigby said, “are likely to exasperate long-suffering investors further.” Rigby retains a ‘buy’ recommendation for Shell.

Shell, the most profitable oil major in 2018 ahead of larger rival ExxonMobil, has in recent years been many investors’ top pick among the group after the Anglo-Dutch firm cut costs and ramped up commitments for shareholder returns.

Shell plans to boost payouts to investors through dividends and share buybacks to $125 billion between 2021 and 2025.

Bernstein analyst Oswald Clint said van Beurden was being over-cautious.

“We’ve no doubt reiterating our buy on Shell is like talking to the wall today and it’s a blow for one of our 2019 top picks,” Clint said in a note.

Turkish Airlines may delay delivery of Airbus, Boeing planes

Updated 27 May 2020

Turkish Airlines may delay delivery of Airbus, Boeing planes

  • The carrier plans to begin some domestic flights on June 4 and international on June 10
  • Airlines chairman said the impact of the coronavirus on market could last up to five years

ISTANBUL: Turkish Airlines, which halted nearly all of its passenger flights as a result of the coronavirus crisis, may delay the delivery of some Boeing and Airbus planes, its chairman was quoted as saying on Wednesday.
The carrier plans to begin some domestic flights on June 4 and some international flights on June 10 as airlines worldwide try to get planes flying again after a global travel slump.
But Turkish Airlines chairman Ilker Ayci said in an interview with Turkey’s Hurriyet newspaper that the impact of the coronavirus could last up to five years and that it would take a while to reach 2019 load factor levels.
Turkish Airlines had received half of its order for 25 Boeing 787-9 planes, he said, adding that the delivery of the rest could be delayed.
The airline is in talks to take delivery of Airbus 350-900s that are ready from an order of 25, and that it was working to delay the delivery of the rest, he said.
“We are trying to lighten the serious loads that could arise. We are getting our narrow-body planes.”
Ayci said Turkish Airlines would no longer offer free in-flight food and drinks on domestic flights and other flights shorter than two hours.
He also repeated that the company would try to maintain employment, but that salaries would have to be adjusted, with the aim of supporting those paid the least.