According to Exxon Mobil Corp., lower natural gas prices and refining margins will cause a $4 billion drop in second-quarter earnings compared to the prior three months.
Exxon’s net income would probably drop to roughly $7.5 billion as a result of the two businesses’ lower profitability, according to a report by RBC Capital Markets analyst Biraj Borkhataria. That is far less than the $9.43 billion estimate of the most recent Bloomberg Consensus.
We anticipate consensus figures to decline over the next few days because “the update is likely to be viewed negatively for earnings expectations into reporting,” Borkhataria added.
As of 5:34 p.m. in New York, the shares decreased 1.3% in after-hours trading to $105.54. Exxon is the first of the five Western oil giants to provide second quarter profit forecasts, giving investors a preview of the complete numbers that are anticipated later this month.
With commodities prices easing amid rising global interest rates and China’s sluggish recovery from Covid-related lockdowns, Big Oil corporations are seeing their earnings decline from record highs set last year. Investors will closely examine the second-quarter numbers to determine whether executives will be able to fulfil their promises to return billions of dollars to shareholders through dividends and buybacks.
According to a statement released by Exxon on Wednesday, the decline in petrol prices cost the company’s earnings roughly $2 billion, while lower refining margins cost the company about $2.1 billion. A $300 million gain in chemicals and a $600 million gain on unresolved futures helped to offset the decreased profits. Only a $100 million drop in oil prices would be seen in earnings, according to the business.
RBC stated that it did not include derivatives’ fluctuations in its net income forecast.
A surge in oil prices brought on by Russia’s war in Ukraine helped Exxon achieve a record quarterly profit of $18.6 billion the previous year.