Exxon Mobil Corporation (NYSE:XOM) expects to post a wider loss in Q3 2020 because it struggles with a slump in the energy industry driven by the coronavirus pandemic.
Factors that lower Q3 earnings
According to Exxon Mobil, factors like lower refining margins, a slump in gas and oil prices, and declining sales volumes are expected to cause a bigger drop in Q3 2020 earnings. Based on the inputs from analysts and the company, its loss could be at 68 cents against a profit of 7 cents. The loss is much bigger compared to the analyst’s estimates of 7 cents loss.
If Exxon Mobil continues to post another major loss in Q3 2020, it is the third consecutive loss in its history of 36 years. The shares of Exxon Mobil trade at $33.66 (down 2%).
Higher crude prices expected to increase earnings
Exxon Mobil expects to report production and exploration earnings in the range of $1.4 billion and $1.8 billion if it could garner higher crude prices in Q3 2020 compared to Q2 2020. The prevailing weak gas prices expect to lower the earnings by up to $500 million.
Weak margins expect to drag down the refining business and put a dent in earnings by up to $600 million. The refining division will also suffer from logistics differentials. However, Exxon Mobil expects to get a boost of $200 million from its chemical business.
A senior analyst at EJER (Edward Jones Equity Research), Jennifer Rowland, said Exxon Mobil expects to experience lower cash flow in Q3 2020 because of the prevailing challenging conditions. Exxon Mobile will publish Q3 2020 results on October 30, 2020.
Oil prices down on Trump tests COVID Positive
Oil prices declined following the reports of President Donald Trump tested coronavirus positive. The Brent crude prices declined to $39.12 (down 4.4%) on Friday. The stock of Exxon Mobil trades lower by 2.8% before the market opens.
CIO of Independent Advisor Alliance, Chris Zaccarelli, said the markets and the government are functioning normally. He advised investors not to be panic at this difficult juncture. The ongoing coronavirus is a threat to the markets and the economy as well.
A Florida based Power and Utility producer, NextEra Energy surpassed Exxon Mobil in market cap.