ExxonMobil Is Doing Everything Possible to Save Its Dividend
ExxonMobil (NYSE: XOM) reported its third-quarter results on Friday. The company's loss for the quarter shrank to $680 million compared to $1.1 billion in the second quarter. While that looks like a positive development, it is in stark contrast with $3.2 billion in profits Exxon churned out in the same quarter last year. Low oil prices, coupled with demand destruction due to COVID-19, have taken a toll on ExxonMobil's earnings, putting its dividends at risk. Let's discuss the factors that may drive the company's performance and dividends going forward.
Though oil and liquids prices and demand improved from the second-quarter lows, the improvements weren't enough to swing ExxonMobil back to profits. The company's total production stood at 3,672 koebd (thousands of oil equivalent barrels per day), nearly flat from 3,638 koebd in Q2. Production volumes fell from 3,899 koebd in the year-ago quarter. In the downstream segment, refinery margins during the quarter were at record low levels, severely hurting the segment's earnings.
An unfavorable environment left ExxonMobil with no options except to cut its costs to reduce losses. The company is cutting down its capital expenditures and other operating costs, including its workforce. ExxonMobil is reducing costs wherever possible, but it has kept its dividends intact so far.
Source Fool.com
