MOSCOW (MRC) -- ExxonMobil has reported its poorest quarterly operating earnings in three years in results dragged down by slim oil refining margins and a rare loss in its chemicals business, said the Financial Times.
The largest US oil group on Friday reported net income of USD5.7bn in the fourth quarter, or 1.33 per share, down from $6bn or USD1.41 per share a year earlier.
The results were buoyed by one-off items worth about USD3.9bn, or USD0.92 per share, largely from gains involving the USD4.5bn sale of Exxon properties in Norway to Var Energi late last year.
Without those items, net profit was about USD1.8bn or USD0.41 per share — below analysts’ expectations of USD0.45.
The USD355m loss in Exxon’s chemicals business was its first in at least two decades. according to data from S&P Global Market Intelligence. Exxon’s oil refining business earned USD898m in the quarter, down by two-thirds from a year before.
“Our operations performed well, while short-term supply length in the downstream and chemicals businesses impacted margins and financial results,” said Darren Woods, chief executive.
The global chemicals business has been difficult, with a “particularly bearish” outlook for polyethylene, a building block for plastics, analysts at Barclays said before the earnings release. Industry profit margins are likely to be strained for some time as supply growth of 5-6 per cent per year outpaces demand growth of 2-3 per cent per year.
Exxon is among the companies adding to capacity as it builds a 1.8m tonne-per-year chemical and polyethylene plant in Texas with Sabic of Saudi Arabia.
China, the world’s largest polyethylene importer, this month announced restrictions on the use of single-use plastics, which will eventually affect its consumption, Wood Mackenzie said.
Exxon has been investing heavily to expand output in the Permian Basin of Texas and New Mexico, home to the most prolific oilfields in the US. Production there increased by 54 per cent on the previous year, a slower annual growth rate than the 72 per cent the company reported in the third quarter.
The company’s overall liquids production increased by 2 per cent on year driven by growth in the Permian, while natural gas volumes decreased 4 per cent. Exxon’s results came a day after Royal Dutch Shell reported an almost 50 per cent drop in fourth-quarter profits caused by lower oil and gas prices and weaker refining and chemicals margins.
Chevron, the second-largest US oil group, was set to report fourth-quarter results later on Friday.
As MRC informed earlier, ExxonMobil resumed PE production at its site in Notre Dame de Gravenchon, France after a temporary shutdown due to commercial reasons. Thus, this plant wa taken off-stream at the end of the 2nd week of December 2019.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.
ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world's oil and about 2% of the world's energy.
MRC