Exxon Mobil Corporation XOM, in a filing with the U.S. Securities and Exchange Commission on Thursday, disclosed that its third-quarter earnings could fall well below analyst estimates, primarily due to the pandemic effect.
The company estimates earnings for the quarter to be anywhere between a loss of 68 cents and a profit of 7 cents. This is significantly lower than the average analyst consensus of 7 cents loss, according to the Refinitv data reported by Reuters.
Exxon is expected to announce the Q3 earnings results on Oct. 30.
What Happened: Exxon expects the change in oil and gas prices, refining margins, and changes in sales volumes to drive down its earnings per share in the third quarter of 2020. A rise in crude prices could enhance earnings between $1.4 billion to $1.8 billion, whereas a fall in gas prices could negatively impact earnings by $500 million, as per the management forecasts.
The adverse impact of weak margins in its refining business is pegged between $200 million to $600 million and crude logistic differentials by an additional $200 million.
Exxon expects its chemical business to improve the earnings position, with a $200 million bump in sales volumes.
Why Does It Matter: In 36 years, the company has never posted losses for three consecutive quarters in a row, Reuters noted. This year, it already booked losses in the first two quarters and seems en route to do the same in the next quarter.
In July, Reuters reported that Exxon was planning deep spending and job cuts to maintain an 8% dividend payout, all the while potentially facing a billion-dollar loss.
Price Action: On Thursday, Exxon stock closed 3.47% lower at $33.13 per share.
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