Page 6 - NorthAmOil Week 05 2021

NorthAmOil COMMENTARY NorthAmOil

Super-majors in the spotlight

US-based super-majors ExxonMobil and Chevron have been in the news as

they announced their quarterly results and reports surfaced of abandoned

merger talks between the two

US US-BASED super-majors Chevron and Exx- hit, with their share prices dropping in the wake
onMobil have been in the news for several rea- of the collapse in oil prices. This was followed by
WHAT: sons during the past week. At least one of the a series of quarterly losses that have continued
Chevron and ExxonMobil reasons – the release of the companies’ results despite some recovery from the worst of the
have been in the news for for the fourth quarter of 2020 – had been sched- downturn, seen in the second quarter of 2020.
several reasons during uled and expected. Others, such as reports that Chevron posted a surprise loss of $665mn,
the past week. the two super-majors had discussed a potential or $11mn on an adjusted basis, for the fourth
merger last year but ultimately abandoned the quarter of last year. The loss – Chevron’s third
WHY: talks, were somewhat more surprising. consecutively – was attributed to low margins
The two are reported Two separate reports by the Wall Street Jour- on fuel, acquisition costs and foreign currency
to have discussed a nal and Reuters cited sources familiar with the effects overwhelming drilling results that had
potential merger last matter as saying high-level preliminary talks been improving. A charge of $120mn associated
year, with the news had been held between the CEOs of Chevron with Chevron’s acquisition of Noble Energy was
coming as they disclosed and ExxonMobil in early 2020, as the coronavi- also included in the result.
their quarterly earnings. rus (COVID-19) pandemic took hold, causing Chevron’s loss per share totalled $0.33, com-
crude prices to collapse. The fact that the merger pared with analysts’ expectations of a $0.07 per
WHAT NEXT: was considered is seen as illustrating the chal- share profit. For the whole of 2020, the company
ExxonMobil is also lenges even the largest oil companies were fac- reported a $5.5bn loss, compared with a profit of
launching a low-carbon ing following the onset of the pandemic. $2.9bn in 2019. Revenue of $94.7bn made 2020
business that will initially According to one of the sources cited by Reu- Chevron’s second worst year this century.
focus on CCS. ters, the talks were serious enough for legal doc- ExxonMobil, for its part, reported an esti-
uments involving certain aspects of the merger mated fourth-quarter loss of $20.1bn, or $4.70
discussions to be drafted. Another of Reuters’ per diluted share, for the fourth quarter of 2020.
sources said the two CEOs envisioned achiev- The result included non-cash, after-tax impair-
ing synergies through massive cost cuts that ment charges worth a record $19.3bn during
would have helped them weather the industry the quarter and contributed to the super-major
downturn. recording its first annual loss in at least 40 years.
Excluding the impairment charges, however,
Still struggling ExxonMobil would have turned a profit, earning
While the super-majors were ultimately better $0.03 per share after three consecutive losses in
positioned than many smaller companies to previous quarters.
survive the downturn, they nonetheless took a Despite the challenges faced over the course

P6 www. NEWSBASE .com Week 05 04•February•2021