Source: Wall Street News Author: He Hao
Exxon Mobil's submission to the Securities and Exchange Commission (SEC) shows that its profits in the second quarter will be affected by the decline in the refining profit margin of the entire industry and the fall in natural gas prices. Exxon Mobil's statement implies that its net income in the second quarter was about $8.3 billion, with an EPS of $1.95, both significantly below the survey consensus. Exxon Mobil's stock price fell, followed by Chevron and Occidental Petroleum.
$Exxon Mobil (XOM.US)$It said on Monday that its profits in the second quarter will be affected by the decline in the refining profit margin of the entire industry and the fall in natural gas prices.
ExxonMobil is expected to release its second-quarter earnings on August 2. The filing released on Monday was a quarterly report submitted to the US Securities and Exchange Commission (SEC), which detailed how factors such as profit margins and commodity prices have impacted the latest quarter's earnings compared to the previous quarter. ExxonMobil is the first supermajor oil firm to publish earnings guidance for the second quarter and is typically viewed as a bellwether for the sector.
This July's earnings report will be the first after ExxonMobil's $60 billion acquisition of Pioneer Natural Resources Company earlier this year, which will make ExxonMobil the largest oil producer in the Permian Basin. According to ExxonMobil, the purchase of Pioneer Natural Resources Company will increase its daily production by 0.5-0.55 million barrels of oil equivalent in the second quarter, compared to the first three months of this year.
In the second quarter, natural gas prices fell due to lower demand forecasts, high production and excess inventory.
ExxonMobil said that changes in natural gas prices could reduce its upstream earnings by $0.3-$0.7 billion in the second quarter compared to the first quarter. However, on the other hand, higher crude oil prices helped to offset the impact of natural gas business. ExxonMobil expects revenue from oil will increase by at least $0.3 billion, up to $0.7 billion. Its total upstream earnings in the first quarter of this year were $5.7 billion.
ExxonMobil also said that lower refining margins would negatively impact second-quarter profits by $1.1-$1.5 billion compared to the first quarter.
Affected by ExxonMobil's earnings report, the company's stock price fell more than 1% before market opening, while the stock prices of Chevron and Occidental Petroleum also fell.
According to LSEG's consensus forecast, ExxonMobil's adjusted EPS is $2.37. According to Bloomberg's survey, analysts had previously expected ExxonMobil's net income to be around $10 billion. The company's EPS in the same period last year was $1.94.
RBC Capital Markets analyst Biraj Borkhataria said:
A decline in refining margins will negatively impact ExxonMobil's profits, which should be foreseeable. Furthermore, we note the impact of natural gas prices and the profitability of Pioneer Company, which has been lower than expected. In general, the company's EPS is lower than the market expectations.
ExxonMobil's statement suggests that its net income for the second quarter is about $8.3 billion, with an EPS of $1.95.
However, ExxonMobil's actual performance often exceeds these forecasts, as the reports submitted to the SEC do not provide detailed information about the company's operations. In the past, the company's actual performance has sometimes been 5%-10% higher than its guidance.
Citigroup analyst Alastair Syme lowered his profit forecast for ExxonMobil by 3% after the latest news release.
Editor/Lambor