Exxon Mobil on Friday reported first-quarter earnings that missed expectations as the industry came under pressure from eroding refining margins and collapsing natural gas prices.
Exxon’s stock is down more than 3%.
Here is what Exxon reported for the first quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
- Earnings per share: $2.06 vs. $2.20 expected
- Revenue: $83.08 billion vs. $78.35 billion expected
The nation’s largest oil company reported net income of $8.22 billion, or $2.06 per share, a 28% decrease from earnings of $11.43 billion, or $2.79 per share, in the same period a year ago.
Revenue beat expectations, coming in at $83.08 billion, but was lower than a year ago, when the company reported $86.56 billion.
Exxon CEO Darren Woods said the results were in line with the company’s plan, attributing the earnings miss to noncash tax and inventory adjustments.
“In fact, in some cases they outperformed,” Woods said of the results in an interview with CNBC’s “Squawk Box.” “You can see that in our cash flow from operations, which exceeded consensus by about a billion dollars.”
Jason Gabelman, managing director of energy equity research at TD Cowen, said the earnings miss doesn’t change anything fundamentally for Exxon’s stock and it is unlikely that Friday’s pullback will hold.
Exxon came under pressure from lower refining margins and natural gas prices that have plummeted from last year’s highs. Natural gas prices have plunged 37% this year, and refining margins are lower than they were a year ago. Chevron faced similar issues this quarter.
Oil and gas production profits fell 12% to $5.67 billion, compared with $6.46 billion in the same quarter last year due to lower natural gas prices. Oil is up more than 16% this year but the rally did little to lift Exxon’s fortunes this quarter.
Exxon produced 3.78 million barrels per day in the quarter, down slightly from the output of 3.83 million barrels per day in the year-ago period. Production in Guyana reached more than 600,000 barrels per day in the first quarter.
“If you look at Guyana and the development there, I think it will go down as one of the best deep-water developments in the history of the industry,” Woods told CNBC.
Exxon’s fuel business saw earnings plummet 67% to $1.38 billion, compared with $4.18 billion in the prior year, due to lower refining margins.
The company’s chemical products segment saw profits more than double to $785 million compared with $371 million in the same quarter last year.
Exxon is currently locked in a dispute with Chevron over the latter’s pending acquisition of Hess Corp. Exxon has taken Chevron to arbitration court to defend the company’s claim to a right of first refusal over Hess’ assets in Guyana under a joint operating agreement.
Woods reiterated that Exxon is not seeking to buy Hess. He said the company wants to know the value Chevron is placing on Hess’ Guyana assets and confirm its preemption rights. When asked whether Exxon is seeking compensation from Chevron, Woods said he is keeping the company’s options open.
“First of all, we’ll confirm the rights of preemption and look to see what the cash value of this asset is within that transaction, and then we’ll explore the opportunities that are available to us,” Woods said.
Chevron said Friday that it expects the Hess deal to close in 2024.