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ExxonMobil signals up to USD20 B writedown to overwhelm 4Q gains in oil, chemicals

January 12/2021

MOSCOW (MRC) -- ExxonMobil Corp signaled in a regulatory filing that higher oil and gas prices and improved chemicals margins would aid fourth quarter results, but the gains would be overshadowed by an up to USD20 billion asset writedown, reported Reuters.

The largest US oil producer has posted losses in the first three quarters of 2020 on an ill-timed spending increase that collided with a downturn in fuel demand and prices. It faces a proxy fight next year by an activist investor calling for deeper cuts, new directors and a refocusing on cleaner fuels.

The filing after the market closed on Wednesday showed Exxon expects higher prices will sequentially lift its oil and gas operating results by between USD200 million and USD1 billion. That business suffered a USD383 million operating loss in the third quarter.

The filing also signaled another operating loss in refining, but higher chemicals margins drove operating profit in that unit by between USD200 million and USD400 million. In the prior quarter, refining posted a USD231 million loss while chemicals turned a USD661 million profit.

The writedown of mostly natural gas properties was previously estimated at between USD17 billion and USD20 billion and the filing narrowed the range of the impairment charge.

Exxon last year began providing a snapshot of its key businesses after the end of each quarter to give investors insight into operations. Many of those prior updates led Wall Street to lower profit forecasts.

Official results are scheduled to be released Feb. 2.

During the final quarter, the company outlined plans for deeper cost cuts that will chop capital spending by at least USD10 billion this year and next, and the first stages of a 15% workforce reduction that will continue through next December.

Adjusted fourth-quarter loss could hit USD3.47 billion, or 61 cents per share, according to Refinitiv IBES data, compared with a year-earlier profit of USD5.69 billion, or USD1.33 per share.

Exxon posted the details after the market close. Its shares finished up 33 cents at USD41.60 but are down 41% year to date.

As MRC informed before, ExxonMobil is planning to shut its aromatics unit in Rotterdam-Botlek, Netherlands, for six weeks of maintenance between March and April 2021, according to market sources. This work is part of a larger turnaround program at ExxonMobil's interconnected 191,000-b/d Botlek refinery and Rotterdam aromatics plant beginning in the first quarter, OPIS reported in October.

Benzene is the main feedstock for the production of styrene monomer (SM), which, in its turn, is used for manufacturing polystyrene (PS).

According to MRC's ScanPlast report, Russia's estimated consumption of PS and styrene plastics totalled 454,990 tonnes in the first eleven months of 2020, which corresponds to the figure a year earlier. November estimated consumption of PS and styrene plastics grew by 4% year on year to 45,830 tonnes.

ExxonMobil Chemical Company is one of the largest petrochemical companies worldwide. The company holds leadership positions in some of the largest-volume and highest-growth commodity petrochemical products in the world. ExxonMobil Chemical Company has manufacturing capacity in every major region of the world, serving large and growing markets. More than 90 percent of the Companys chemical capacity is integrated with large refineries or natural gas processing plants.
Author:Margaret Volkova
Tags:PS, benzene, crude and gaz condensate, styrene, petrochemistry, Exxon Mobil, Netherlands, Russia, USA.
Category:General News
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