Exxon Sees Higher Oil Prices Raising Upstream Earnings

ExxonMobil expects its upstream earnings to be up to $700 million higher for the second quarter compared to the first quarter of the year, due to higher liquids prices, the U.S. supermajor said on Monday in a preview of its Q2 results.

While the change in liquids prices could result in up to $700 million additional upstream earnings, the decline in natural gas prices is expected to reduce these earnings by between $300 million and $700 million compared to the first quarter.

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 the first quarter of 2024, 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 first-quarter 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.

By Charles Kennedy for Oilprice.com

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