Oil majors' numbers suffer from "a year like no other"

The oil majors continue to suffer as the impact of the COVID Pandemic and reduced oil demand took their toll on 2020, although some still managed to show profitability. 

For BP 2020 ended with a whole-year loss of $5.7bn compared to the company's $10bn profit in 2019. As with most of their competitors, the significant downturn was driven by lower oil and gas prices, major exploration write-offs, reduced refining margins and depressed demand.

There were some signs of recovery, however, a reported Q4 profit of $1.4bn against a $0.5bn loss in the previous quarter. This included a $2.3bn boost on disposal after the sale of BP's petrochemicals business.  The company also saw nearly 10,000 people leave the organisation during the year. 

The human aspect of the industry's situation was reflected in the comments from BP's CEO, Bernard Looney, who stated: "2020 will forever be remembered for the pain and sadness caused by COVID-19. Lives were lost – livelihoods destroyed. Our sector was hit hard as well. Road and air travel are down, as are oil demand, prices and margins." 

He also stated the company's new direction: "We launched a net zero ambition, set a new strategy to become an integrated energy company and created an offshore wind business in the US."

Shell's figures were also significantly lower, not helped by a poor Q4. Reflecting lower realised prices for oil and LNG, Q4 2020 saw a 516% drop against Q3 with a loss in income of $4.0bn  This led to an overall  $21.68bn reduction in income for 2020, representing a 237% fall against 2019's $15.84bn figure. The company also attributes its results to lower production volumes and realised refining margins.

Looking ahead to Q1 of 2021, Shell stated: "Due to demand or regulatory requirements and/or constraints in infrastructure, Shell may need to take measures to curtail or reduce oil and/or gas production, LNG liquefaction as well as utilisation of refining and chemicals plants and similarly sales volumes could be impacted. Such measures will likely have a variety of impacts on our operational and financial metrics."

Also experiencing the downward trend is ExxonMobil whose reported fourth quarter loss of $20.1bn included unfavourable identified items of $20.2bn, primarily non-cash impairments. Earnings excluding identified items were $110m. Earnings in the twelve-month period were, unsurprisingly, gloomy with 2020 showing a $22.4bn loss compared to earnings of $14.3bn in 2019.

“The past year presented the most challenging market conditions ExxonMobil has ever experienced,” said Darren W. Woods, chairman and CEO. “While the effects of the pandemic significantly impacted our 2020 results, our previously executed strategic initiatives and reorganizations enabled us to respond decisively to permanently improve our cost structure, drive greater efficiencies across our businesses, and emerge a stronger company. These improvements are expected to deliver structural expense savings of $6bn per year by 2023, relative to 2019.”

An income of $1.3bn was reported by Total for Q4 2020, representing a reduction of 59% from the same period in 2019. Adjusted net income for 2020 was $4.06bn down 66% from 2019.  Again, overall annual impact was helped by a more encouraging final quarter, leading Patrick Pouyanné, chair and CEO to comment: "The Group's fourth quarter results rebounded from the previous quarter where oil prices stabilised above $40 a barrel."

Meanwhile, in what Mike Wirth, Chevron’s chairman and CEO described 2020 as a "year like no other", with the company reported a Q4 2020 loss of $665m. Although this compared favourably with the the $6.6bn for the same period in 2019, the fully year figures still made grim reading with a total loss across 2020 of $5.54bn against a 2019 loss of $2.92bn.

And finally, Phillips 66 reflected the general trend with a fourth-quarter 2020 loss of $539m ($507m adjusted), compared with a loss of $799m ($1m adjusted) for Q3. The Q4 recovery was relatively cold comfort, with the 2020 annual numbers showing a $3.9bn deficit against a $3bn profit the previous year.  Echoing the sentiments of his fellow CEOs, Phillips 66 Chairman Greg Garland commented: "2020 was a year of unprecedented challenges. We took early, decisive steps to reduce costs and capital spending, secure additional liquidity and suspend share repurchases. We are focused on the health and safety of our employees, their families and our communities as we deliver products that are essential to the global economy."