ExxonMobil and Chevron posted disappointing second-quarter earnings Friday as the American energy sector reels with oil prices mired in a prolonged downturn.
Chevron posted a loss of $1.47 billion for the quarter after turning a $571 million profit in the same period a year earlier, while Exxon's profit declined 59% to $1.7 billion.
Disappointed investors drove shares of Exxon down 1.4% to close at $88.95 Friday. Chevron shares edged 0.7% higher to $102.48.
It's a sharp reversal in fortunes for a sector that practically printed money in oil's heyday just a few years ago. Exxon's revenue plunged 22.2% to $57.7 billion, missing S&P Global Market Intelligence analyst estimates of $64 billion. Chevron revenue fell 24.4% to $27.8 billion, missing estimates of $29.6 billion.
The crushing slide in revenues for Exxon and Chevron illustrates the significance of oil's slide, despite second-quarter gains that snuffed out fears of prices below $30 per barrel that reigned in the first quarter.
“While our financial results reflect a volatile industry environment, ExxonMobil remains focused on business fundamentals, cost discipline and advancing selective new investments across the value chain to extend our competitive advantage,” Exxon CEO Rex Tillerson said in an email.
Similarly, Exxon's earnings-per-share of 41 cents missed S&P Global Market Intelligence estimates of 64 cents. Exxon cut spending on capital investment and energy exploration by 38% for the quarter to $5.2 billion. The company lost its AAA credit rating in the second quarter, illustrating the severity of oil's slide.
Chevron lost 78 cents per share, compared with earnings of 30 cents per share in the same quarter of 2015. The company said it had recorded one-time impairment costs, primarily in its upstream oil business, and other non-cash charges of $2.8 billion.
“The second-quarter results reflected lower oil prices and our ongoing adjustment to a lower oil price world,” Chevron CEO John Watson said in a statement.
Taken together, the underwhelming figures point to further trouble as oil prices have charted a downward path following the United Kingdom's vote to exit the European Union.
Oil prices fell six consecutive days heading into Friday. West Texas Intermediate oil, the U.S. benchmark, traded in the $41 range Friday, just a few weeks after topping $50 per barrel in what looked like a steady recovery.
Investors are reacting to three key factors:
"The trend in oil prices so far this year has closely resembled their pattern last year, with prices rising in the first half of the year before retreating in the summer," Capital Economics commodities economist Thomas Pugh said Friday in a research note.