(Reuters) - Exxon Mobil XOM.N could slip into a bigger-than-expected loss in the third quarter as the U.S. oil major struggles to cope with the effects of a pandemic-driven downturn in the energy industry.
The company on Thursday listed a number of factors that could impact its earnings such as oil and gas prices, refining margins and sales volumes, suggesting that Exxon’s numbers could range from a loss of 68 cents to a profit of 7 cents. The calculation was based on inputs from the company and analysts.
The midpoint of the range at 30 cents loss is much wider than analysts’ estimate for a loss of 7 cents, according to Refinitiv IBES.
If the oil major posts another loss, it would be the first time that Exxon has reported a third straight quarterly loss in at least 36 years. The company had in July vowed to make deep spending cuts to cope with sharply lower energy demand and prices.
Exxon shares fell 2% at $33.66.
Higher crude prices will help Exxon’s exploration and production earnings by $1.4 billion to $1.8 billion, compared with the second quarter, the company said. However, weak gas prices will weigh on the segment and could hurt earnings by as much as $500 million.
Refining business will be dragged down by weak margins, knocking off $200 million to $600 million in earnings, while logistics differentials could hit the division by as much as $200 million. (bit.ly/3l2CWP1)
Exxon expects a $200 million boost from chemicals business, the company said.
“Given the challenging conditions, we expect a free-cash-flow shortfall during the quarter, calling into question how long the company can continue to use debt to fund its dividend,” said Jennifer Rowland, a senior analyst at Edward Jones Equity Research.
The company is expected to report its results on Oct. 30.
Reporting by Arathy S Nair in Bengaluru; Editing by Maju Samuel and Anil D’Silva
Our Standards: The Thomson Reuters Trust Principles.