Exxon Mobil Indicates Second-Quarter Earnings Impact from Refining Margins and Natural Gas Prices, According to Reuters

By Tanay Dhumal

Exxon Mobil announced on Monday that lower prices and refining margins are anticipated to impact the oil giant’s earnings for the second quarter.

This will mark the company’s first earnings report following its $60 billion acquisition of Pioneer Natural Resources, a deal that positions Exxon as the largest oil producer in the Permian Basin.

Exxon indicated that fluctuations in gas prices could lead to a decrease in quarterly upstream earnings by $300 million to $700 million compared to the first quarter. A decline in natural gas prices during the quarter resulted from reduced demand forecasts, high production levels, and excess inventory.

Despite these challenges, rising crude oil prices are expected to offset some losses, with Exxon predicting an increase in oil earnings of at least $300 million. The company reported total upstream earnings of $5.7 billion in the first quarter.

Additionally, Exxon noted that lower refining margins would negatively affect its second-quarter profits by between $1.1 billion and $1.5 billion in comparison to the previous quarter.

In its earnings preview, the company stated that the acquisition of Pioneer would contribute between 500,000 and 550,000 barrels of oil equivalent per day to its production in the second quarter, relative to the first three months of the year.

Shares of Exxon, which have risen about 13% this year, experienced a 1.3% decline in pre-market trading.

"Quarter-over-quarter earnings are set to be impacted by lower refining margins, which were expected. We also note that the effects from gas prices and the earnings contribution from Pioneer were worse than we had anticipated," commented Biraj Borkhataria, an analyst at RBC Capital Markets.

Analysts forecast that the company will report an adjusted profit of $2.37 per share, according to consensus estimates.