The world’s five largest oil companies collectively cut the value of their assets by nearly $50 billion in the second quarter

The world’s five largest oil companies collectively cut the value of their assets by nearly $50 billion in the second quarter The world’s five largest oil companies collectively cut the value of their assets by nearly $50 billion in the second quarter, and slashed production rates as the coronavirus pandemic caused a drastic fall in fuel prices and demand. The dramatic reductions in asset valuations and decline in output show the depth of the pain in the second quarter. Fuel demand at one point was down by more than 30% worldwide, and still remains below pre-pandemic levels. Several executives said they took massive writedowns because they expect demand to remain impaired for several more quarters as people travel less and use less fuel due to the ongoing global pandemic that has killed more than 700,000 people. Of those five companies, only Exxon Mobil (XOM.N) did not book sizeable impairments. But an ongoing re-evaluation of its plans could lead to a “significant portion” of its assets being impaired, it reported, and signal the elimination of 20% or 4.4 billion barrels of its oil and gas reserves.  

“It’s low-cost production mode through the end of 2021 for sure''

  By contrast, BP (BP.L) took a $17 billion hit. It said it plans to re-center its spending in coming years around renewables and less on oil and natural gas. Weak demand means oil producers must revisit business plans, said Lee Maginniss, managing director at consultants Alarez & Marsal. He said the goal should be to pump only what generates cash in excess of overhead costs. “It’s low-cost production mode through the end of 2021 for sure, and to 2022 to the extent there are new development plans being contemplated,” Maginniss said. London-based BP has previously said it plans to cut its overall output by roughly 1 million barrels of oil equivalent (boepd) by the end of 2030 from its current 3.6 million boepd. BP PLC (NYSE: BP) is a British integrated oil and gas company with operations in more than 70 countries around the world. Its upstream operations were responsible for the production of 3.6 million barrel-of-oil equivalents (BOEs) per day in Q3 2019. The company's downstream operations include oil and gas trading and distribution activities, and the production and marketing of petrochemicals, lubricants, and fuels. As of July 2020, BP has a market capitalization of $77.4 billion. Of the five, Exxon is the largest producer, with a daily output of 3.64 million boepd, but its production dropped 408,000 boepd between the first and second quarters. Exxon Mobil Corp. engages in the exploration, development, and distribution of oil, gas, and petroleum products. The company was founded by John D. Rockefeller in 1882 and is headquartered in Irving, TX. The five majors, which include Chevron Corp (CVX.N), Royal Dutch Shell (RDSa.L) and Total SA (TOTF.PA), also cut capital expenditures by a combined $25 billion between the quarters. You might also be interested in: The U.S. dollar was struggling to keep a rare rally together on Monday