What’s Going On Here?

Chevron and Exxon – the most valuable Western oil producer – reported first-quarter updates that reveal the mess the oil industry’s just stepped in.

What Does This Mean?

• Exxon unexpectedly announced its first quarterly loss in 32 years, while Chevron announced a better-than-expected first quarter.
• The oil markets have been weighed down lately, (see the reason why in my previous news summary), so oil companies all over the world are looking for ways to limit losses and save cash:
  • Exxon announced a 30% cut to its spending plans
  • Chevron announced its second cut in six weeks.

Luckily for investors, neither has cut its sacrosanct dividends.

Why Should I Care?

The bigger picture: Wah! Wah! Wah!

Given the low oil price, both Chevron and Exxon might’ve preferred to produce less oil last quarter, but an oil rig in motion is a hard thing to stop. All that excess-holding might be why the US government’s now considering a bailout cradle for the entire industry.

Bailout is an act of giving financial assistance to a failing business or economy to save it from collapse.

For markets: Oil goes green.

• European oil major Shell cut its dividend last week, and other oil firms are likely to follow suit.
• Rather than take it as a negative sign as a whole, Goldman Sachs reckon it’ll throw up new opportunities altogether, suggestong more M&A – particularly in the renewable industry.

Content source: Finimize. (2020) Spoiled. Available at: https://www.finimize.com/wp/news/spoiled/ [Accessed on May 4, 2020]