Exxon Mobil Corporation (NYSE:XOM) Q2 2020 Earnings Conference Call - Final Transcript

Jul 31, 2020 • 09:30 am ET

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Exxon Mobil Corporation (NYSE:XOM) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, everyone. Welcome to this ExxonMobil Corporation Second Quarter 2020 Earnings Call. [Operator Instructions]

At this time, I'd like to turn the call over to the Vice President of Investor Relations and Secretary, Mr. Stephen Littleton. Please go ahead, sir.

Executive
Stephen Littleton

Thank you. Good morning, everyone. Welcome to our second quarter earnings call. We appreciate your participation and continued interest in ExxonMobil. I'm Stephen Littleton, Vice President of Investor Relations.

Before getting started, I wanted to say that I hope all of you, on the call, your families and colleagues are safe in light of the challenges our world continues to face. Joining me today is Exxon Mobil's Senior Vice President, Neil Chapman, who oversees our Upstream business.

After I cover the quarterly financial and operating results, Neil will provide his perspectives and provide an update on the steps we're taking to navigate the current market environment and ensure we remain well positioned for the recovery. Following Neil's remarks, I will be happy to address specifics on the quarterly reported results while Neil will be available to take your questions on broader themes, including the corporation's strategic priorities, progress on spending reductions, updates on major projects and views on market fundamentals. Our comments this morning will reference the slides available on the Investors section of our website.

I would also like to draw your attention to the cautionary statement on Slide 2 and the supplemental information at the end of this presentation. I'll now highlight the developments since the first quarter of this year on the next slide. In the Upstream, liquids realizations fell by about 50% compared to the first quarter, as impacts from the coronavirus rippled through the global economy, significantly reducing demand. In response to the unprecedented market conditions, production was curtailed by approximately 330,000 oil equivalent barrels in the quarter.

Despite considerable challenges, including global travel and supply chain disruptions, we were able to maintain strong operational performance in all of our businesses. We also progressed growth projects such as Guyana with Phase 1 demonstrating nameplate production capacity and we progressed Phase II FPSO topside integration in Singapore. In the Permian, the Delaware central processing and exporting facility started up, which enhances our integrated position in the basin through collection and processing of production from our Delaware Basin assets and enables efficient lower cost delivery to Gulf Coast markets.

In the Downstream, refining margins decreased from first quarter levels and were 50% below 10-year annual lows, reflecting the significant reduction in demand and the resulting impact of increased levels of product inventory. Refinery sparing was approximately 30% with reduced demand. However, utilization improved through the quarter as we saw early signs of recovery from the lows, including demand for road transportation fuels.

Although bottom of cycle conditions persist in the Chemical business, margins were sustained at first quarter levels with lower realizations being offset by lower feedstock costs. While COVID-19 impacted demand in the chemical industry, the impact across our portfolio was moderated by resilient demand in