ExxonMobil reported another three months of “dismal” financial results, as the world’s biggest fossils began releasing their quarterly earnings reports.
“For Exxon, it was the ninth straight quarter of year-over-year profit declines, the longest such streak since at least 1988,” Bloomberg reports, in a post picked up the by Institute for Energy Economics and Financial Analysis. “The bleak result in Rex Tillerson’s final quarter at the helm was presaged last week when Chevron Corporation disclosed its first annual loss in at least 37 years.”
- Concise headlines. Original content. Timely news and views from a select group of opinion leaders. Special extras.
- Everything you need, nothing you don’t.
- The Weekender: The climate news you need.
Exxon’s profits fell from US$2.78 billion, or 67¢ per share, in the last quarter of 2015 to a trifling $1.68 billion, or 41¢ per share, in Q4 2016. The result, which came in about 40% lower than analysts expected, reflected a reluctant, $2-billion write-off on assets that Exxon no longer thinks it can develop due to the sustained crash in oil and gas prices.
“Exxon warned investors in October that it may be facing the biggest reserves revision in its history, as depressed prices made some fields unprofitable to drill,” Bloomberg’s Joe Carroll recalls. “About 3.6 billion barrels of reserves in the Canadian oil sands and the equivalent of another billion barrels in other North American fields could fall off the company’s books if low energy prices persisted, Exxon said at the time. That would equate to 19% of Exxon’s reserves, and would be the largest de-booking since the 1999 merger that created the company in its modern form.”
In other fossil financial news, Royal Dutch Shell reported its lowest annual profits in more than a decade, at $3.5 billion, while selling off $5 billion worth of assets and planning another $5 billion in disposals, including its fossil holdings in Gabon. The company had incurred serious debt with its $54-billion acquisition of BG Group Plc last year, but that deal increased its reserve replacement ratio—an important measure that weighs a fossil’s oil and gas reserves against its annual production—by 208%.
“For Shell, disposals of $3 billion in the fourth quarter helped shave $4.5 billion off its net debt,” Reuters reports. “Although Shell’s fourth-quarter profit was lower than expected at $1.8 billion due to tax impairments, and full-year earnings dropped, it still made more money than rival ExxonMobil in the second half of the year.”
The company is planning $10 billion in new projects, adding the equivalent of a million barrels of oil per day to global fossil production, by 2018. “Others are talking about getting back to growth,” said CFO Simon Henry. “We’re actually doing it now.”