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Exxon points to another expected quarterly loss amid $20B writedowns
Dec. 30, 2020 10:55 PM ET Exxon Mobil Corporation (XOM) By: Carl Surran, SA News Editor 31 Comments
Exxon Mobil (NYSE: XOM) indicates higher oil and gas prices and improved chemicals margins will boost Q4 results, but the gains will be overshadowed by writing off as much as $20B in assets, according to an SEC filing.The filing shows Exxon expects higher prices will sequentially lift its oil and gas operating results by $200M-$1B, vs. a $383M operating loss suffered by the business in Q3.Exxon also expects another operating loss in refining, but higher chemicals margins drove operating profit in the unit by $200M-$400M, vs. a Q3 $231M loss in refining and a $661M profit in chemicals.Adjusted Q4 loss could hit $3.47B, or $0.61/share, according to Refinitiv IBES data, compared with a year-earlier profit of $5.69B, or $1.33/share.Meanwhile, the filing confirms an anticipated writedown of as much as $20B on Exxon's upstream assets. A Q4 loss would confirm Exxon's challenges in covering both dividends and capital spending from operational cash flow; the last time the company generated enough free cash to cover its dividend payout was Q3 2018.Exxon, which is expected to disclose its full Q4 results on Feb. 2, may have opened the door late in November to changing course in its dividend payout policy, Cowen analyst Jason Gabelman says, noting the company's mention of a "reliable and growing dividend" during an October conference call with analysts vs. its Nov. 30 statement announcing writedowns and spending cuts that only mentioned its commitment to a "reliable" payout.But "Exxon Mobil's dividend is safer than you think," MMR Research writes in a bullish analysis published recently on Seeking Alpha.On Wednesday, the S&P Energy (NYSEARCA: XLE) sector, which incudes Exxon, threw out a bullish "golden cross" technical signal.
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