① The three energy giants that announced their results this week have all seen a decline in profits. This is related to rising crude oil prices squeezing refining profits and falling natural gas prices in warm climates; ② Analysts are watching the two acquisitions of ExxonMobil and Chevron, which may determine the business prospects of these two companies this year.
AFP, April 27 (Editor: Malan) US and European energy giants began announcing their first-quarter results this week, but to Wall Street's disappointment, companies that have already published financial reports didn't start well early this year.
Jean-Pierre Sbraire, chief financial officer of French oil giant Total, pointed out that the price of natural gas in Europe fell by 35%, reflecting the impact of mild winters and high gas storage levels.
Despite this, Total's first-quarter results were slightly better than analysts' expectations, as refining profits partially offset the sharp decline in gas profits. However, on a year-on-year basis, Total's profit for the first quarter fell 22% year on year to 5.1 billion US dollars, but it was better than the 5 billion US dollars predicted by London Stock Exchange analysts.
Meanwhile, two major US oil giants — ExxonMobil and Chevron — saw profits fall due to weak gasoline and fuel profits. In the first quarter, ExxonMobil's profit fell 28% year over year, and Chevron fell 16%.
ExxonMobil's revenue for the first quarter exceeded expectations of 79.7 billion US dollars, reaching 83 billion US dollars, but its net production declined slightly, from 3.83 million barrels of oil equivalent per day in the same period last year to 2.78 million barrels per day. It reported earnings per share of $2.06, which was lower than Wall Street's estimate of $2.189.
Chevron earned $2.93 per share, below expectations of $2.99. Its revenue grew slightly to $48.7 billion, a year-on-year increase of $300 million.
Performance prospects
Since this year, Brent crude oil futures have accumulated a cumulative increase of 17.75%, and WTI crude oil futures have increased by a cumulative total of 18.87%. The rise in oil prices means that energy giants' refining profits will inevitably fall this year. Total also indicated that due to geopolitical risks and OPEC+ production restrictions, profits from its refining business will continue to decline in the second quarter and beyond.
The gas business is also less optimistic. The US gas benchmark — Port Henry futures prices have been below $1.70 per million British thermal units. Earlier this year, the benchmark price fell to a three-year low due to warm weather and oversupply.
But the energy giants weren't too discouraged. Strong profits last year prompted major companies to step up bidding to increase oil and gas production.
ExxonMobil is buying Pioneer Natural Resources, an American shale oil producer, and the deal is worth $60 billion. ExxonMobil plans to close the deal in the second quarter of this year.
Chevron, on the other hand, plans to buy the US independent company Hess for 53 billion US dollars, but it is facing controversy. ExxonMobil holds 45% of Hess's shares in the Stabroek oilfield block off Guyana. The protest alleges that the Chevron and Hess deal ignored ExxonMobil's preferential purchasing rights, thus causing ExxonMobil's losses. Hess holds 30% of Stabroek's shares.
Chevron's deal to acquire Hess is in arbitration proceedings. Chevron executive Mike Wirth said he is confident of winning arbitration and resolving disputes in the fourth quarter. However, analysts currently believe that the future of ExxonMobil and Chevron this year will largely depend on whether the two acquisitions can be successfully completed.