Exxon Mobil Corp. (NYSE: XOM) reported second-quarter 2020 results before markets opened Friday. The integrated oil and gas giant posted an adjusted diluted earnings per share loss of $0.70 on revenues of $32.6 billion. In the same period a year ago, the company reported earnings per share (EPS) of $0.61 on revenues of $69.1 billion. Second-quarter results also compare to the consensus estimates for a net loss of $0.61 and revenues of $38.2 billion.

The quarter’s results included a $0.44 “positive noncash inventory valuation adjustment from rising commodity prices.” Excluding that adjustment, Exxon’s second-quarter loss totaled $0.26.

Second-quarter cash provided by operations fell from $5.9 billion a year ago to zero, and capital spending totaled $5.3 billion, down by 34% year over year. Excluding working capital, asset sales and cash flow from operations totaled $1.5 billion in the second quarter, down from $7.2 billion in the same period of last year.

Net income in the quarter dropped from $3.1 billion a year ago to a net loss of $1.1 billion.

Oil-equivalent production fell by 3% to 3.6 million barrels a day, reflecting a decrease of 3% in liquids production and a 12% decrease in natural gas production.

CEO and Chair Darren Woods said that the company is confident that it can meet its cost-reduction target for the year and based on current projections, “we do not plan to take on any additional debt.” Total debt at the end of the quarter was $69.5 billion, up by $9.9 billion sequentially and by $24.3 billion year over year.

Capital and exploratory spending in the quarter totaled $5.3 billion. For the first half of the year, capex totaled $12.5 billion. Exxon has forecast full-year capex at approximately $23 billion.

The net loss in the company’s upstream (exploration and production) totaled $1.65 billion, compared to a profit of $3.26 billion in the year-ago quarter. The decline was due largely to a decline of $4.5 billion in price realizations.

Downstream results (refining and marketing) increased by $525 million year over year to $976 million. The increase is entirely due to a noncash inventory valuation that added $1.2 billion to the segment’s non-U.S. downstream results.

Exxon did not provide financial guidance but in a presentation to accompany its conference call the company said that upstream production would decline by a total of about 200,000 barrels a day in the third quarter. Refinery runs are expected to improve while refining margins remain weak.

Analysts are expecting a third-quarter loss per share of $0.01 on revenues of $46.9 billion, compared with EPS of $0.67 and revenues of $65.1 billion in the third quarter of 2019. For the full year, analysts are looking for a loss per share of $0.12 on revenues of $192.2 billion.

Exxon paid $3.7 billion in dividends ($0.87 per share) in the second quarter. With operating cash flow of just $43 million, virtually all the dividend payment was borrowed.

The good news for investors is that Exxon has been able to borrow enough cash to pay its dividend. The not-so-good news is that the company had to raise the valuation on its inventories in order to dress up a dismal quarter. On a GAAP basis, rival Chevron posted a net loss per share of $4.44 in the quarter, including a $1.8 billion charge to account for lower crude prices. Exxon’s oil is not worth more than Chevron’s.

Exxon’s shares traded down 2% early Friday, at $41.08. The stock’s 52-week range is $30.11 to $75.18. Analysts had a 12-month price target of $47.38 before this morning’s report. The company’s dividend yield is 8.31% at an annualized rate of $3.48 per share.

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