Losses pile up for Exxon, Chevron

December 6, 2016
Shale Play

By CASEY JUNKINS

Shale Play

WHEELING, W.Va. -Global oil and natural gas giants ExxonMobil and Chevron saw their profits slashed by a combined $9.7 billion during the last two years, but industry leaders remain optimistic because commodity prices continue recovering.

Both Irving, Texas-based Exxon and San Ramon, Calif.-based Chevron are active players in the Marcellus and Utica shale region, as Exxon subsidiary XTO Energy drills wells in eastern Ohio, while Chevron works in Marshall County.

From July through September 2014, Exxon and Chevron earned a combined $13.7 billion worth of profits. However, during the same time frame this year, the two companies joined to collect a relatively modest $4 billion.

The profit decline corresponds to the selling price for crude oil and natural gas. In August 2014, a barrel of oil sold for approximately $100 on the New York Mercantile Exchange, but the price fell to about $47 this year. The NYMEX price for a 1,000 cubic-foot unit of natural gas in August 2014 was $4, but only $3 this year.

Still, leaders of both companies remain optimistic about the industry as a whole. For Chevron, third-quarter 2016 profits were $1.3 billion, down from $2 billion the previous year.

"Third-quarter results, though down from a year ago, reflect an improvement from the first two quarters of this year," Chevron Chairman and CEO John Watson said. "We have made progress toward our goals of lowering the cash breakeven in our upstream business and getting cash balanced."

Chevron lost $212 million during the third quarter on drilling and fracking operations, but the company earned $523 million for processed and refined materials, such as chemicals.

"Capital spending and operating and administrative expenses have been reduced by over $10 billion from the first nine months of 2015 as a result of a series of deliberate actions we have taken," Watson said.

For Exxon, profits declined by $1.5 billion from last year - $2.7 billion in 2016 compared to $4.2 billion in 2015. Chairman and CEO Rex Tillerson attributes most of the decline to oil and natural gas prices.

"ExxonMobil's integrated business continues to deliver solid results," Tillerson said. "While the operating environment remains challenging, the company continues to focus on capturing efficiencies, advancing strategic investments, and creating long-term shareholder value."