$70 Billion: How Much Exxon Mobil Will Shrink In 2020

by Trefis Team
+26.76%
Upside
40.81
Market
51.73
Trefis
XOM
Exxon Mobil
Rate   |   votes   |   Share

Per EIA’s short term energy outlook, the global crude oil demand is likely to grow during the latter half of the year and benchmark crude oil prices (WTI) are expected to remain under $40 per barrel. Exxon Mobil (NYSE: XOM), one of the largest integrated oil & gas companies in the world, would lose $70 billion in annual revenues from lower production and weak commodity prices as highlighted in our interactive dashboard about Exxon Mobil’s Revenues. Despite the expected revenues declines, the company announced a dividend of $0.87 per share for the second quarter. While the company raised $12 billion in debt to improve liquidity, it is targeting a 15% reduction in operating expenditures along with a 30% lower capex in 2020 to preserve shareholder value.

 

A Quick Look At Exxon Mobil’s Revenues

Exxon Mobil’s two revenue components generated $265 billion in total revenues for the full-year 2019.

  • Sales & Other Operations: $256 billion in FY2019 (96% of Total Revenue). It majorly includes revenues from the sale of crude oil & other products by Exxon Mobil and its consolidated companies. It also includes revenues from transportation services provided to third-party crude oil producers.
  • Equity Earnings & Other Income: $9.3 billion in FY2019 (4% of Total Revenue). It includes income from investments in affiliates.

 

Global oil demand to shrink by 8% in 2020 but, prolonged restriction measures could lead to a slower recovery

  • In 2019, Exxon Mobil produced 2,386 MBD of crude oil and natural gas liquids with a fairly equal contribution of 30% from both Asia and the U.S.
  • The average production cost per barrel of oil equivalent in the U.S., Europe, Asia, and Africa was $12.25, $13.69, $7.34, and $17.51, respectively.
  • With the benchmark prices (WTI) likely to remain under $40 in the foreseeable future, the company will likely curtail production in the U.S., Europe, and Africa.
  • While mandatory production cuts have not been imposed in the U.S., the 30% reduction in capital expenditure plan and a sizable decline in rig count (75%) in Permian is likely to trim production by at least 10%.

 

Benchmark prices to remain depressed due to lower demand for transportation services and industrial goods

 

 

See all Trefis Price Estimates and Download Trefis Data here

What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams

Rate   |   votes   |   Share

Comments

Name (Required)
Email (Required, but never displayed)
Be the first to comment!