Losses Adding Up For Exxon, Chevron
Prices tumble, only 21 rigs running in W.Va., Ohio
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WHEELING -- In 2014, Ohio and West Virginia saw an average of about 65 rigs running to extract natural gas and oil from the Marcellus and Utica shales, with a majority of those located in the Upper Ohio Valley.
After two years of tumbling prices, there are now only 21 rigs running in the two states, with only 7 of those in West Virginia. The profits of two global energy giants, Exxon Mobil and Chevron, seem to correlate with the significant drop in drilling activity throughout the region during the last two years.
From April through June 2014, Exxon and Chevron earned a combined $14.5 billion worth of profits. During the same period this year, however, that total profit fell to just $200 million, with Chevron actually posting a $1.5 billion loss during the quarter.
San Ramon, Calif.-based Chevron maintains operations in Marshall County. Via its XTO Energy subsidiary, Irving, Texas-based Exxon features active wells in Belmont and Monroe counties.
"The second quarter results reflected lower oil prices and our ongoing adjustment to a lower oil price world," Chevron Chairman and CEO John Watson said.
In the second quarter of 2014, Chevron earned $5.7 billion. At that time, a barrel of oil was worth about $103 on the New York Mercantile Exchange, with a 1,000 cubic-foot unit of natural gas (Mcf) then valued around $4.79.
However, in 2016 second quarter, the NYMEX price for oil was about $48.46 and an Mcf of natural gas was only about $2.
These lower prices contributed to Chevron actually losing $1.5 billion from April through June.
"We continue to make progress towards our goal of getting cash balanced," Watson said. "Our operating expenses and capital spending were reduced over $6 billion from the first six months of 2015."
"In addition, we're bringing our major capital projects to completion," he added.
Exxon, meanwhile, did earn $1.7 billion during the three-month period this year, but this seems paltry compared to the $8.8 billion it collected from April through June 2014.
"While our financial results reflect a volatile industry environment, Exxon Mobil remains focused on business fundamentals, cost discipline and advancing selective new investments across the value chain to extend our competitive advantage," Rex W. Tillerson, Exxon chairman and CEO, said. "The corporation benefits from scale and integration, which provide the financial flexibility to invest in attractive opportunities and grow long-term shareholder value."