Exxon Mobil Signals Q2 Earnings Hit from Refining Margins, Natural Gas Prices.
Exxon Mobil (XOM.N) announced on Monday that lower natural gas prices and refining margins are expected to negatively impact the oil major’s second-quarter earnings. This report will be Exxon’s first earnings release following the acquisition of Pioneer Natural Resources for $60 billion, a move that has made Exxon the largest oil producer in the Permian Basin.
Exxon stated that changes in gas prices could reduce its quarterly upstream earnings by $300 million to $700 million compared to the first quarter. The decline in natural gas prices during the reported quarter was attributed to a lower demand forecast, high output, and excess inventories.
However, higher crude prices helped mitigate some of this weakness, with Exxon projecting an increase of at least $300 million in oil earnings. The company’s first-quarter total upstream earnings were $5.7 billion.
Additionally, Exxon reported that lower refining margins would negatively impact second-quarter profits by $1.1 billion to $1.5 billion compared to the prior quarter.
Related Posts
Despite these challenges, the Pioneer acquisition is expected to add between 500,000 and 550,000 barrels of oil equivalent per day to Exxon’s second-quarter production, relative to the first three months of the year.
Shares of Exxon, which have gained approximately 13% so far this year, were down 1.3% in pre-market trading following the announcement. “Quarter-on-quarter earnings are set to be impacted by lower refining margins, which should be expected. Further, we note the hit from gas prices, as well as the earnings contribution from Pioneer, were worse than we had modeled,” said Biraj Borkhataria, an analyst at RBC Capital Markets.
Analysts anticipate the company will post an adjusted per share profit of $2.37, according to LSEG’s consensus estimate.
