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Will ExxonMobil Report Quarterly Loss for 3rd Time in a Row?

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Exxon Mobil Corporation (XOM - Free Report) recently provided a glimpse of third-quarter operations, which are expected to have been affected by the pandemic at large. The impact of the pandemic on energy demand and oil and gas prices is concerning, especially for companies like ExxonMobil. It is expected to incur losses in both upstream and downstream businesses in third-quarter 2020 due to continuing headwinds from the coronavirus pandemic.

Upstream

Even though upstream operations are expected to gain $1.4-$1.8 billion in the third quarter from second-quarter 2020 due to improving liquids prices, it will likely bear an additional $100-$500 million brunt from declining gas prices. Notably, it reported second-quarter loss of $1.9 billion (excluding identified items) from upstream operations. Hence, the segment is likely to hover in the negative territory in the third quarter as well.

Downstream & Chemicals

Loss from the refining business is expected to increase $200-$600 million from second-quarter loss of $600 million due to lower margins. Moreover, the company is expected to have a maximum $200 million negative impact from North American crude logistics differentials. The chemicals business’ margins are expected between $100 million decline and $100 million increase. Second-quarter earnings from this segment were $400 million.

Earnings Estimates

Notably, the Zacks Consensus Estimate for third-quarter loss is pegged at 17 cents per share. Earnings per share of 68 cents were recorded in the year-ago period. The company is scheduled to release third-quarter results on Oct 30. In the past 30 days, it has witnessed no upward movement but two downward estimate revisions. In case the estimates come true and the company reports a quarterly loss, it will be the third one in a row, a rare occasion in the last 36 years.

Moreover, the Zacks Consensus Estimate for third-quarter revenues is pegged at $49.4 billion, indicating a 24.1% decline from the year-ago period.

LNG Project

Hai Phong’s port city in Vietnam recently approved a nearly $5.1 billion liquefied natural gas (LNG) power project, which will likely be developed by ExxonMobil, per Reuters. The project is expected to commence electricity generation in 2026 or 2027, with an initial capacity of 2.25 gigawatts. The capacity will likely double to 4.5 gigawatts by 2029-2030. The project is also expected to incorporate a terminal with a capacity of 6 million tons of LNG per year.

Price Performance

The stock has lost 18.5% in the past six months compared with 22.3% fall of the industry it belongs to. 

Zacks Rank & Stocks to Consider

Currently, ExxonMobil has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include Equinor ASA (EQNR - Free Report) , Pioneer Natural Resources Company and Matador Resources Company (MTDR - Free Report) . While Equinor sports a Zacks Rank #1 (Strong Buy), Pioneer Natural and Matador Resources hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Equinor’s bottom line for 2021 is expected to skyrocket 118.2% year over year.

Pioneer Natural’s bottom line for 2021 is expected to surge 191.3% year over year.

Matador Resources’ sales for 2021 are expected to rise 12.2% year over year.

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