Exxon: Higher Oil Prices Consolidating Upstream Earnings

In a preview of its Q2 results, the U.S. supermajor ExxonMobil said on Monday that it expects greater upstream profitability for the second quarter of the year compared to the first quarter of the year, perhaps reaching $700 million.

Although there could be an additional $700 million in upstream earnings due to the change in liquids pricing, these earnings are projected to be lower by $300 million to $700 million as compared to Q1 due to the fall in natural gas prices.

Exxon, set to report Q2 earnings on August 2, will be reporting its first earnings since closing the $60-billion acquisition of Pioneer Natural Resources, which made it the biggest producer in the top U.S. shale basin, the Permian.

The upstream earnings considerations above exclude Pioneer-related impacts. The change in industry margins in the second quarter are expected to result in between $1.1 billion and $1.5 billion lower earnings in the energy products segment, Exxon’s filing with the SEC showed today. Part of these could be offset by the change in timing effects, which could add between $500 million and $900 million to the earnings of the energy products segment.

For 2024’s Q1, Exxon booked $8.2 billion in total earnings, including $5.7 billion in the upstream division. However, the supermajor’s $8.2 billion earnings were lower than consensus estimates, due to declining natural gas prices and refining margins and non-cash adjustments.

Exxon’s Q1 earnings of $8.2 billion were down from $11.4 billion for the first quarter of 2023. Earnings per share were $2.06 for the first quarter of 2024, down from $2.79 for the same period last year, and below the analyst consensus forecast of $2.19.

The yearly decline in earnings was the result of industry refining margins and natural gas prices coming down from last year’s highs to trade within the ten-year historical range, Exxon said at the time.

Strong production growth in Exxon’s Guyana assets only partially offset lower natural gas realizations in the upstream and weaker industry refining margins and unfavorable timing effects in the downstream.