Oil rout erodes second-quarter profits for U.S. majors Exxon, Chevron
By Ernest Scheyder
HOUSTON (Reuters) - Chevron Corp CVX.N posted its worst quarterly loss since 2001 on Friday and Exxon Mobil Corp (XOM.N: Quote) reported a 59 percent slide in profit, as the long crude price rout CLc1LCOc1 and tumbling refining income inflicted pain across the energy sector.
The weak results from two of the world's largest oil producers come as the energy industry is at a crossroads, trying to survive in an era of low prices, which many analysts see as the new status quo, while funding expensive growth projects crucial for long-term survival.
"It's a challenging environment for the integrated" oil producers, said Brian Youngberg, an energy analyst with Edward Jones. "The key is to manage the cash flow as best they can and continue to execute on projects, which they do appear to be doing."
Exxon, the world's largest publicly traded oil producer, shocked Wall Street as its quarterly profit missed expectations, sending its shares down as much as 4.5 percent on Friday.
Its profit from producing oil and gas fell about 85 percent to $294 million. In the United States, where Exxon is the largest natural gas producer and a major oil producer, the company lost money.
Exxon executives defended their business model, saying they have the financial flexibility to do many things, including large acquisitions, while maintaining their dividend. The company did cut most of its share buyback program earlier this year.
Standard & Poor's downgraded the company's vaunted "AAA" credit rating to "AA+" earlier this year, as dividends and capital expenditures were exceeding cash flow.
This month Exxon said it would pay more than $2.5 billion in stock for InterOil Corp IOC.N, expanding its push into the Asian liquefied natural gas market. Continued...