The first oil giant's financial report guidance! Exxon Mobil: Refining profit margins and natural gas prices decline, impacting profitability

Exxon Mobil said on Monday that its second-quarter earnings will be affected by the decline in the industry's refining margins and the drop in natural gas prices.

Exxon Mobil is expected to announce its second-quarter financial results on August 2nd, with the quarterly filing submitted to the U.S. Securities and Exchange Commission (SEC) on Monday. The filing includes information on how factors such as profit margins and commodity prices have impacted the latest quarter compared to previous quarters. Exxon Mobil is the first super oil giant to release second-quarter profit guidance and is typically seen as a representative of the industry.

The July financial report will be the first report for the oil giant after completing the $60 billion acquisition of Pioneer Natural Resources earlier in May, which will make Exxon Mobil the largest oil producer in the Permian Basin. Exxon Mobil stated that the acquisition of Pioneer Natural Resources will increase its daily production by 500,000-550,000 barrels of oil equivalent in the second quarter compared to the first three months of this year.

In the second quarter, natural gas prices fell due to reduced demand forecasts, high production, and excess inventory.

Exxon Mobil stated that the change in natural gas prices may reduce its upstream earnings by $300-700 million compared to the first quarter. However, on the other hand, higher crude oil prices helped offset the impact of the natural gas business, with the two roughly balancing out. Exxon Mobil expects oil earnings to increase by at least $300 million, up to $700 million. The company's total upstream earnings in the first quarter of this year were $5.7 billion.

Exxon Mobil also mentioned that lower refining margins compared to the first quarter will negatively impact second-quarter profits by $1.1-1.5 billion.

Due to the impact of Exxon Mobil's performance report, the company's stock price fell more than 1% in pre-market trading, and Chevron and Occidental Petroleum's stock prices also followed suit. Exxon Mobil's stock price has risen by about 14% year-to-date, reaching a historical high in April.

According to consensus estimates from LSEG, Exxon Mobil's adjusted earnings per share are expected to be $2.37. According to Bloomberg's survey, analysts had previously estimated Exxon Mobil's net income to be around $10 billion. The company reported earnings per share of $1.94 in the same period last year.

Biraj Borkhataria, an analyst at RBC Capital Markets, stated:

Exxon Mobil's earnings will be impacted by the decline in refining margins, which should have been foreseeable. In addition, we note the impact of natural gas prices and the weaker profit contribution from Pioneer than we expected. Overall, the company's earnings per share are below market expectations.

Exxon Mobil's statement implies that its second-quarter net income is around $8.3 billion, with earnings per share of $1.95.

However, Exxon Mobil's actual performance often exceeds these forecasts because the reports submitted to the SEC do not provide detailed information about the company's operations. In the past, the company's actual performance has sometimes been 5%-10% higher than its guidance Citigroup analyst Alastair Syme lowered its profit forecast for Exxon Mobil by 3% following the latest news release