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Energy Exxon misses estimates as $2 billion writedown erodes cash

Exxon misses estimates as $2 billion writedown erodes cash

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ExxonMobil Corp. missed analyst estimates after a $2 billion writedown in the value of U.S. natural gas fields.

The fourth-quarter profit of $1.68 billion, or 41 cents a share, compared with a profit of $2.78 billion, or 67 cents, a year earlier, the Irving, Texas-based oil producer said in a statement on Tuesday. That was below the lowest of 21 estimates of analyst surveyed by Bloomberg.

For Exxon, it was the ninth straight quarter of year-over-year profit declines, the longest such streak since at least 1988. The bleak result was presaged last week when Chevron disclosed its first annual loss in at least 37 years and may signal a string of disappointing results from rivals Royal Dutch Shell, BP and Total in coming days.

The market collapse that crushed prices, dried up cash flow and prompted hundreds of thousands of job cuts across the industry aggravated the impact Exxon felt from its own stillborn Russian drilling venture, domestic legal disputes over whether the company engaged in climate-science deception and the loss of its gold-plated credit rating.

Brent crude, the international benchmark, rose 14 percent to average $51.06 a barrel during the final three months of 2016, compared with $44.69 a year earlier, according to data compiled by Bloomberg. U.S. natural gas jumped 42 percent to an average of $3.177 per million British thermal units. Typically, about 60 percent of the output from Exxon’s wells is oil; the rest is natural gas and related byproducts.

In his first month on the job, Chairman and Chief Executive Officer Darren Woods is looking to deepwater drilling in South America and West Africa, natural gas exports in the South Pacific and shale riches in the Permian Basin beneath Texas and New Mexico to bolster reserves and improve Exxon’s production and profit outlook. The company agreed two weeks ago to shell out as much as $6.6 billion to double its Permian drilling rights in Exxon’s biggest transaction in 6 1/2 years.

Exxon warned investors in October that it may be facing the biggest reserves revision in its history as depressed prices made some fields unprofitable to drill.

About 3.6 billion barrels of reserves in the Canadian oil sands and the equivalent of another 1 billion barrels in other North American fields could fall off the company’s books if low energy prices persisted, Exxon said at the time. That would equate to 19 percent of Exxon’s reserves and would be the largest de-booking since the 1999 merger that created the company in its modern form.

Woods, an Exxon lifer whose responsibilities included overseeing the company’s fleet of refineries and chemical plants, became chairman and CEO on Jan. 1 after his mentor Rex Tillerson was nominated for secretary of state.

The statement was released before the opening of regular U.S. equities trading. Exxon fell 0.8 percent to $84.86 on Monday in New York. The stock has increased 9 percent in the past year.


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