Exxon’s U.S. production business lost $477 million in the third quarter, the seventh such quarter in the red, said Exxon, even though this was the company’s best quarter, reports the Associated Press.
Exxon is blaming the “challenging business environment” that dates back to the slump in crude oil prices that began in 2014. Oil prices reached a low of $26 a barrel back in mid-February, but have since rebounded to $50 a barrel. Shares of Exxon stock lost 2.0 percent as a result of the crash in oil prices.
Exxon and other oil companies had to cut capital spending in order to ride out the crisis, with Exxon investing only $4.19 billion, down 45 percent from capital spending the year before. This year, Exxon has already made cuts of over $9.0 billion in production investments.
Wall Street analysts are concerned over Exxon’s cuts, saying this could mean less oil and higher prices in the future. Added to that is Exxon’s write-down warnings. Exxon says that reserves of about 4.6 billion barrels of oil and gas in its Kearl oil sand operation in Canada may no longer be profitable to produce.
There is no doubt that the oil giant is under financial pressure. CNN Money is reporting that Exxon has been forced to borrow money to finance massive drilling costs and to cover generous dividend payouts. In the meantime, its long-term debt has skyrocketed to $46 billion, forcing Exxon to scrap its shareholder-friendly stock buybacks.
America’s second-largest oil company, Chevron fared far better this quarter. After posting three straight quarters of losses, Chevron posted a profit of $1.3 billion on Friday, surprising everyone on Wall Street.
