ExxonMobil signals 2Q earnings hit from refining margins, natural gas prices
ExxonMobil said on Monday lower natural gas prices and refining margins are expected to hit the oil major's 2Q earnings.
The oil major would be reporting its first earnings after closing the acquisition of Pioneer Natural Resources for $60 B, with the combined operations making it the largest oil producer in the Permian basin.
Exxon said changes in gas prices could decrease its quarterly upstream earnings by $300 MM–$700 MM compared with the first quarter.
Natural gas prices had fallen in the reported quarter hurt by lower demand forecast, high output and excess inventories.
However, higher crude prices helped undercut this weakness, with Exxon expecting oil earnings to rise by at least $300 MM. The company's 1Q total upstream earnings stood at $5.7 B.
Exxon also said lower refining margins would have a negative impact on 2Q profit of between $1.1 B and $1.5 B compared with the prior quarter.
The oil major said in its earnings snapshot the Pioneer acquisition would add between 500,000 bpd and 550,000 bpd of oil equivalent to its 2Q production, compared with the first three months of the year.
Shares of Exxon, which have gained about 13% so far this year, were down 1.3% in pre-market trade.
"QoQ earnings are set to be impacted by lower refining margins, which should be expected. Further, we note the hit from gas prices, as well as the earnings contribution from Pioneer were worse than we had modeled," said Biraj Borkhataria, analyst at RBC Capital Markets.
Analysts expect the company to post an adjusted per share profit of $2.37, according to LSEG's consensus estimate.
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