Exxon Mobil Corp (NYSE: XOM), the world's largest publicly traded oil producer, announced a 63% drop in first-quarter profit to $1.8 billion due to the oil crash on Friday. The revenue also slumped 39% to $48.7 billion. According to FactSet, this number is the lowest quarterly profit the company since 1999. Compared with $1.17 per share, the number reported at $0.43 per share.
Weaker margins decreased earnings by $860 million while volume and other mixed effects increased earnings by $10 million.
The giant oil company blamed "sharply lower commodity prices" and overall "challenging industry conditions" impacting the oil business. Even though crude oil has bounced back to around $45 a barrel, oil prices slumped to $26 a barrel in the first quarter, the lowest level since 2003. Oil companies are still under pressures. Furthermore, the company also said it cut its spending by 33% to $5.13 billion. Conservative use of cash is a move Exxon has to do as oil and gas prices swung to their lowest levels in the recent decade.
In the U.S., the upstream division, exploration and production, widened its loss to $832 million from $52 million a year earlier. Downstream division, refining and marketing earnings plunged 46% to $906 million.
The counterpart of Exxon, Chevron, went to red as well. The second largest oil company in the U.S. on Friday posted a first-quarter loss of $725 million, compared with the profit of $2.6 billion.
Exxon said on Friday it will keep buying back shares tied to its benefit plans. However, it’s just not now to spend on buybacks to reduce shares outstanding.