What's going on?
Exxon reported better-than-expected third-quarter earnings on Friday, sure, but it’s still playing patch-up after its third quarterly loss in a row.
What does this mean?
With fewer gas guzzlers on the roads taking people to work, school, and macramé classes, a lot less gas has been guzzled lately. And that’s not just crushed demand for oil: it’s crushed demand for Exxon’s oil, which led the company lose $680 million last quarter.
Exxon already announced it’d be reducing investments in oil production by $10 billion a few months ago, but now it’s going to have to tighten its belt even more – by another $7 billion, in fact. It’s planning to lay off 1,900 people in its US business too, which comes hot on the heels of European layoffs earlier this month. And it’s not through yet: the company thinks it could end up laying off as much as 15% of its entire global workforce (tweet this).
Why should I care?
For markets: Not oil companies are created equal.
Oil demand might be having a tough time, but Exxon seems to be having more trouble than its rivals keeping things under control. Just look at Shell – which reported better-than-expected earnings late last week – and both America’s Chevron and France’s Total, which got back to posting profits.
The bigger picture: Stick with us, kid.
Oil companies like Exxon tend to have volatile share prices, but they’re good at keeping investors on side by offering dividends. So it’s probably no surprise that Exxon’s doing all it can to keep its payouts intact. And while this was the first time since 1982 that it didn’t raise its dividend, beggars can’t exactly be choosers: Shell was forced to reduce its dividend earlier on in the year. That might explain why, this year, its share price has performed the worst of all the oil majors mentioned here…
Originally posted as part of the Finimize daily email.
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