From Jennifer Hiller, Reuters News Service, February 2, 2021

HOUSTON (Reuters) -Exxon Mobil Corp on Tuesday posted a historic annual loss after the COVID-19 pandemic hammered energy prices and the company reduced the value of shale gas properties by more than $20 billion.

Exxon last year slashed spending on new projects by nearly a third, outlined plans to cut up to 15% of its workforce while adding $21 billion to its debt to cover spending and restructuring.

The changes come amid “the most challenging market conditions Exxon has ever experienced,” said Chief Executive Darren Woods, and over time will cut costs by $6 billion a year compared to 2019.

The company reported a net annual loss of $22.4 billion for 2020, on the writedown and losses in oil production and refining, compared with a full-year profit of $14.34 billion in 2019.

Exxon declined to comment if it has ever had an annual loss, but the company churned out profits since Exxon merged with Mobil in 1999 and through the 1980s oil bust.

OILMAN JOINS BOARD

The company remains under fire from environmentalists and activist investors pushing for a board overhaul and a strategy that would transition to cleaner fuels. Exxon pushed back against their calls for clean energy expertise, naming the former head of Malaysia’s state oil company, Tan Sri Wan Zulkiflee Wan Ariffin, to its board. It is in discussions with other candidates, the company added.

Other oil majors posted losses for the year as pandemic-related travel restrictions cut fuel demand and triggered huge writedowns. Rivals BP Plc and Chevron Corp posted annual losses.

Royal Dutch Shell Plc reports financial results Thursday.

Exxon posted a net loss of $20.2 billion, or $4.70 per share, in the fourth-quarter ended Dec. 31, compared with a profit of $5.69 billion, or $1.33 per share, a year ago. Excluding the impairment and other charges, the company earned 3 cents per share, beating analysts’ average expectation of a one-cent gain, according to Refinitiv IBES data.

Exxon shares, which have lost a quarter of their value in the past 12 months, rose 1.6% to $45.62 on Tuesday.

“The turnaround story will take some time,” said Biraj Borkhataria, analyst with RBC Capital Markets, noting that the company is not yet covering its dividend and capital spending with cash from operations.

But with oil prices recovering, Exxon can start to cover dividend and begin paying down the $68 billion in debt on its balance sheet, Woods said. Oil is up 11% so far this year, and trading at pre-pandemic levels.

Exxon still has “plenty of wood to chop” but the willingness to cut costs to pay the dividend will play well with investors, said Mark Stoeckle, senior portfolio manager at Adams Funds.

Project spending fell nearly a third last year and this year will near the bottom of the company’s $16 billion to $19 billion forecast, Woods said. Spending will rise to as much as $25 billion from 2022 through 2025, he said.

LOWER OUTPUT IN OIL AND REFINING

Exxon’s oil and gas output was 3.7 million barrels of oil and gas per day in the fourth quarter, down 8% compared with a year earlier.

It projects a doubling of Permian Basin output to 700,000 barrels per day by 2025, down from the million-barrel target it previously had expected to hit by 2024 in the top U.S. shale field, Woods said.

Exploration and production, Exxon’s largest business, lost $18.5 billion in the fourth quarter on the natural gas asset impairments, compared with a profit of $6.1 billion the year prior.

Its chemicals business earned $691 million on better margins in part from lower oil prices, up from a loss of $355 million a year ago. Refining lost $1.2 billion, compared with a profit of $898 million last year, on weak margins and lower output as the pandemic limited global travel.

The writedown lays bare the size of the miscalculation that the company made in 2010 when it paid $30 billion for U.S. shale oil and gas producer XTO Energy.

The move to shake up its board comes as Exxon faces a proxy fight with hedge fund Engine No. 1, which has proposed four candidates and wants the board to include clean-energy experience.

“Exxon Mobil shareholders deserve a board that works proactively to create long-term value, not defensively in the face of deteriorating returns and the threat of losing their seats,” Engine No.1 said in a statement.

On Monday, Exxon said it would invest $3 billion on lower emission solutions through 2025 and that it has created a business that will focus on commercializing its carbon capture technology.

https://www.reuters.com/article/us-exxon-mobil-results/pandemic-pushes-exxon-to-historic-annual-loss-20-billion-cut-in-shale-value-idUSKBN2A21LN

By Kristen Mosbrucker, The Advocate, Baton Rouge, LA, January 26, 2021

ExxonMobil’s proposed modernization of its Baton Rouge refinery would have an economic impact of at least $277 million spent with businesses in Louisiana, of which $226 million would be spent in Baton Rouge, the company says.

The company said it is carving out at least $3.5 million with diverse suppliers and $1 million for suppliers in north Baton Rouge.

If the project is approved, ExxonMobil would invest several hundred million dollars in the modernization, but is only revealing about $240 million of its proposed investment, based on what’s potentially eligible for tax breaks.

The state Board of Commerce and Industry is expected on Friday to vote on whether the project’s Industrial Tax Exemption program request should move forward.

The East Baton Rouge Parish school board, metropolitan council and the sheriff’s office will then decide in coming months on whether to approve up to 80% property tax abatement for 10 years worth $20 million in exchange for $230.5 million in upgrades at the refinery.

A final investment decision by the company is expected this year and is partially dependent upon tax breaks being approved. Construction could begin about halfway through the year.

The oil giant hired Stephen Barnes, economist and director of the Kathleen Blanco Public Policy Center at the University of Louisiana at Lafayette, to conduct an economic impact study about the proposed site modernization, released on Tuesday.

The project would generate $6.7 million for the Sheriff’s Office, $20 million in property taxes for East Baton Rouge Parish and $21.9 million for the East Baton Rouge School District if approved, the report said. ExxonMobil also is expected to use the state’s workforce development training program FastStart.

ExxonMobil expects to spend several hundred million dollars at the refinery to make it more competitive and position it for a potential major expansion in the future.

The projects would enable the processing of new types of crude oil while reducing environmental emissions at the site.

The company expects to pay $4 million in sales taxes from construction and another $2.7 million in sales taxes during operations. Over a 20-year period, the company expects to pay $21.8 million in property taxes.

More than 1,200 construction jobs would be supported through 2023. There are no new permanent jobs tied to the proposed project but the company says that since the industry as a whole has been shedding jobs in recent years the investment will help protect existing jobs.

As a result, it’s estimated that 84 jobs at the refinery would not be lost over the next decade. ExxonMobil has 1,300 existing jobs, which include engineers, operators and technicians working at the refinery.

https://www.theadvocate.com/baton_rouge/news/business/article_44b3a40e-5ffe-11eb-98c0-4f5b8965d4b1.html