Global oil company ExxonMobil, once the undisputed world leader in market capitalization, is facing a massive loss.
According to the New York Times, ExxonMobil recorded a loss of $2.4 billion in the first three quarters of this year alone. Even though it had no company to match it in terms of profitability as well as size. And its stock price fell 35 percent.
Investors, including hedge fund D.E. Shaw, one of ExxonMobil’s major shareholders, are calling for ExxonMobil to start cutting costs. It calls for readjusting the business structure so that they can maintain dividends. It has already reduced the number of its executives and employees by 15 percent, or 14,000 people.
ExxonMobil has already begun massive business restructuring. It announced last month that it will invest $19 billion in next year and $20 billion to $25 billion in facility investment between 2022 and 2025. The move marks a sharp setback from its business initiative. Which had vowed to invest more than $30 billion by 2025.
ExxonMobil faced such loss because of the combination of situations
The most urgent problem is the decrease in both oil prices and demand due to the COVID-19 pandemic. In the longer term, climate change has become a problem, raising questions about the future of oil-related industries. Financial companies are also trying to reduce their holdings unless they make efforts to reduce carbon dioxide emissions. The election of U.S. President Joe Biden, who is actively responding to climate change, also darkens the business outlook.
In fact, the Wall Street Journal (WSJ) last month quoted an internal report from ExxonMobil and said it has lowered its forecast for oil prices. It lowers by 11 to 17 percent over the next seven years compared to previous estimates.
Last year alone, ExxonMobil expected to trade an average of $62 per barrel over the next five years and rise to $72 per barrel in 2026 and 2027. But this year’s forecast was that oil prices would be $50 to $55 per barrel over the next five years. With only $60 per barrel in 2026 and 2027.
