How Will The Slowing Global Economy Affect Exxon Mobil’s Revenues For 2020?

by Trefis Team
Exxon Mobil
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ExxonMobil (NYSE:XOM) is a multinational oil major that specializes in upstream operations, downstream operations, and chemicals. The company has operations on every continent, and employs over 71,000 people globally. It competes with other oil & gas giants including Chevron, Royal Dutch Shell and BP.

Trefis captures trends in ExxonMobil’s Revenues over the years along with our forecast for the next two years in an interactive dashboard. We believe that the company is likely to report nominal revenue growth over full-year 2020, with the top line edging close to $300 billion despite expected global headwinds from the ongoing U.S.-China tariff war due to an uptick in its Upstream business as we detail below.

A Quick Look At ExxonMobil’s Revenues 

  • Upstream: ExxonMobil’s upstream revenue is expected to be $25.8 billion in 2019, growing by 2% YoY. Growth is down significantly from 2017, when revenue grew by 20%. Since then, oil prices have moderated and Exxon has been focused on profits which has led to a slowdown in upstream revenue. Natural gas prices coming down from the high $3’s to the mid $2’s has also weighed on natural gas revenues for the current year, because of which we expect growth to be around 4% in 2019.
  • Downstream: Revenue from this segment is facing headwinds from a glut in refined products and weak demand from the Eurozone. This has meant that revenue has fallen from growth of 20% in 2018, to an expected 2% in 2019.
  • Chemicals: Revenue from the Chemicals division witnessed volatility in the previous two years as a result of both demand and supply issues. In 2019, revenue is expected to grow at 2% with the slow growth attributable to a slowdown in the broader economy – especially in the automobile market.

Our Outlook for ExxonMobil:

  • We expect demand to be moderate moving forward, with the global economy showing few signs of improving in 2020
  • While some of the OPEC countries have reduced their output and shale rigs are coming down at record rates, crude supply has remained steady.
  • The fewer rig counts should finally bring down the level of U.S crude supply due to reduced shale output in 2020, and Exxon’s positioning within the Permian Basin will allow it grow its volume, which along with higher oil prices will drive revenues.
  • Natural gas prices are expected to remain range bound with an oversupply and weak demand, weighing down on prices.
  • Similarly, we expect revenue from chemicals to remain relatively weak as the broader economy is expected to remain tepid.

Overall, we expect Exxon to see an average 2020 unless something changes substantially. Data around our forecast for ExxonMobil’s revenues by segment are available in our interactive dashboard.

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