ExxonMobil Foresees Possible Q2, 2024 Profit Shrink

Samuel Mobolaji

Oil major, ExxonMobil is anticipating a sharp drop in profit in the second quarter of the year, due to lower refining margins across the industry and lower natural gas prices.

Exxon Mobil Corp pointed put the above operating factors affecting the quarter suggest earnings per share between $1.50 and $2.40, or about $8.3 billion, which is 17 per cent below market consensus.

The preview excludes additional oil and gas production from its $60 billion acquisition of Pioneer Natural Resources concluded on May 3.

Exxon has also provided some indication on how the Pioneer deal will affect results, which includes capital spending running at about $4.8 billion on an annualized basis.

The oil major anticipated that Pioneer would add between 500,000 and 550,000 barrels of oil equivalent per day to its second quarter production, compared with the first three months of the year.

Full financial results, which include other factors other than operational results, are due on August 2.

The largest U.S. oil producer indicated operational results from oil and gas – its main business will increase due to higher oil prices and despite lower natural gas prices to about $6.2 billion from $4.6 billion in the second quarter last year, according to a securities filing.

The oil firm also said lower refining margins would hurt second-quarter profit of between $1.1 billion and $1.5 billion compared with the prior quarter.

ExxonMobil, has more than doubled its production to 1.3 million barrels of oil equivalent per day (boepd) since concluding the acquisition of Pioneer, up from 620,000 boepd in 2023.

The full effects of the merger will be felt in the third quarter.

The company has said it plans to triple Permian production to 2 million boepd by 2027 by drilling horizontal wells that are closer to each other than the industry average, in a cube format, to extract more oil and gas from the rocks.

Results also reflect record oil production in Guyana, where Exxon pumped 632,000 boepd with partners in May, reaching a daily record of 663,000 boepd. This is about 100,000 boepd above the initial planned capacity.

ExxonMobil’s shares were down less than 1 per cent but its shares have risen more than 13 per cent this year, below the S&P 500s 16 per cent increase, but ahead of other major Western oil rivals.

The company has announced it will increase share buybacks to a $20 billion run rate following the closure of the acquisition.

It had projected a 40,000 boepd negative production impact in the quarter due to scheduled maintenance and $3 billion in seasonal cash tax payments.