The global oil-and-gas industry remains under extreme financial pressure as demand for fossil fuels rebounds slowly after being crushed by the coronavirus pandemic.
Some of the largest western oil companies including Exxon Mobil Corp. and Royal Dutch Shell PLC signaled this week that key parts of their business continued to struggle through the summer and early fall, which will weigh down the third-quarter results they are set to report in coming weeks.
Exxon warned Thursday that parts of its business continue to be unprofitable, even as the company performed better than in the second quarter. The Texas oil giant said it expected earnings from its oil production unit to improve by as much as $1.8 billion from the second quarter, but that its natural gas sales and its refining business may lose more money. Analysts forecast a quarterly loss of more than $500 million when the company reports on Oct. 30, which would mark its third consecutive quarter in the red.
Shell said Wednesday it would cut up to 9,000 jobs in a broad restructuring, and warned it was also poised to report poor third quarter earnings, including a second consecutive quarterly loss in its oil-and-gas production business. The planned job cuts follow similar moves at peers including BP PLC and Chevron Corp. to rein in costs amid the pandemic. Exxon has said it is conducting a workforce review, which may lead to layoffs.
This year’s lousy oil-and-gas earnings have turned off many investors, who remain unenthusiastic about the companies despite a modest rebound in crude prices from the historic lows of this spring. A stock index of U.S. oil-and-gas companies is down about 55% in 2020 even as the overall stock market is up slightly. Exxon’s shares are down around 50% so far this year, while Shell’s are down about 58%.