By Sabrina Valle and Tanay Dhumal
HOUSTON (Reuters) – Exxon Mobil Corp signaled on Monday that lower industry-wide refining margins and lower natural gas prices will cut second-quarter profits.
A snapshot of operational factors that affected the quarter suggests earnings per share of between $1.50 and $2.40, or about $8.3 billion, which is 17% below market consensus.
The preview excludes additional oil and gas production from the $60 billion acquisition of Pioneer Natural Resources, which was completed on May 3.
But Exxon has provided some indications about how the Pioneer deal will affect results, which includes capital expenditures of 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 factors other than operating results, will be released on August 2.
The largest US oil producer has indicated that operating results from oil and gas – its core business – will increase due to higher oil prices and despite lower natural gas prices to around $6.2 billion , up from $4.6 billion in the second quarter of last year, according to a securities filing. .
Exxon also said lower refining margins would negatively impact second-quarter profit by between $1.1 billion and $1.5 billion compared to the previous quarter.
PIONEER
Exxon has more than doubled its production to 1.3 million barrels of oil equivalent per day (boepd) since completing the Pioneer acquisition, up from 620,000 boepd in 2023. The full effects of the merger will be felt in the third quarter.
The company said it plans to triple Permian production to 2 million boepd by 2027 by drilling horizontal wells closer together than the industry average, in a cube shape, in order to extract more oil and gas from the rocks.
The 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 initially planned capacity.
Exxon shares fell less than 1%. Its shares are up more than 13% this year, below the S&P 500’s 16% rise but ahead of other big Western oil rivals.
The company announced that it will increase share repurchases to a run rate of $20 billion after the acquisition closes. It had projected a negative production impact of 40,000 boepd for the quarter due to scheduled maintenance and $3 billion in seasonal cash tax payments.
(Reporting by Sabrina Valle, editing by Franklin Paul and Tomasz Janowski)
