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Will ExxonMobil's (XOM) Upstream Business Hurt Q4 Earnings?
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Exxon Mobil Corporation (XOM - Free Report) is geared up to release fourth-quarter 2020 results on Feb 2, before the opening bell. Since the integrated energy player has significant exposure to upstream business, the company is likely have borne the brunt of the year-over-year drop in commodity prices in the December quarter.
Upstream Business
ExxonMobil’s upstream businesses fall under core operations. This segment reflects the company’s activities related to exploring, and developing of oil and natural gas resources. Notably, from upstream operations, within and outside the United Sates, the energy giant reported a loss of $1.5 billion in the first nine months of 2020.
Upstream Performance in Q3
Non-U.S. Operation: During third-quarter 2020, ExxonMobil reported earnings of $298 million from upstream activities outside the United States. This marked deterioration from the year-earlier profit of $2.1 billion owing to lower commodity prices.
U.S Operation: From domestic operations, ExxonMobil reported a loss of $681 million against the year-ago quarter’s profit of $37 million. Lower prices hurt domestic operations.
Q4 Oil Price
The price of West Texas Intermediate (WTI) crude oil has improved roughly 25% through the December quarter of 2020. The approval of two coronavirus vaccines, which will probably help end the deadliest pandemic in more than a century, in the last month of the fourth quarter by the U.S. health regulators boosted investor confidence in fuel demand recovery, lifting crude price.
However, the pricing scenario was definitely not as healthy as the pre-pandemic fourth-quarter 2019 levels. In the December quarter of 2019, the price of WTI crude traded consistently above the $50-per-barrel mark. In comparison, through the fourth quarter of 2020, the commodity traded below the mark.
Thus, the dip in crude prices is likely to have hurt ExxonMobil’s upstream operations in the fourth quarter, in both international and domestic markets.
Forecast for Q4 Oil & Gas Production
The Zacks Consensus Estimate for fourth-quarter production is pegged at 3,674 thousand barrels of oil equivalent per day (MBoE/D), suggesting a decline from the year-ago quarter’s 4,018 MBoE/D.
Production of Crude & Natural Gas Liquids: The consensus estimate for world-wide net crude oil and liquids production is pegged at 2,244 thousand barrels per day (MBbl/D), indicating a decline from 2,436 MBbl/D in the year-ago quarter.
Natural Gas Production: The Zacks Consensus Estimate for world-wide natural gas production available for sale is pegged at 8,596 million cubic feet per day (Mcf/d), implying a decline from 9,495 Mcf/d in fourth-quarter 2019.
Upstream Profit to Deteriorate in Q4
Prices and production of commodities are the two key parameters that determine the fate of upstream operations. With oil equivalent production likely to have deteriorated and oil pricing scenario bleak as compared to the year-ago quarter, the Zacks Rank #3 (Hold) company’s earnings from upstream businesses are likely to have declined.
Non-U.S. Operation: The Zacks Consensus Estimate for earnings after taxes from non-U.S. upstream operations is pinned at $861 million, suggesting a decline from $6,069 million reported in the year-ago quarter.
U.S. Operation: The Zacks Consensus Estimate for after-tax loss from upstream operations in the domestic region is pegged at $229 million, indicating deterioration from profit of $68 million in the year-ago quarter.
Earnings & Revenue Projections
The weak upstream business is likely to have hurt the company’s results in the December quarter of 2020. Notably, the Zacks Consensus Estimate for fourth-quarter earnings of one cent per share suggests a decline of 97.6% year over year. Moreover, the Zacks Consensus Estimate for sales of $48.6 billion indicates a 27.7% year-over-year decrease.
Other big energy giants, with significant upstream exposure, that are gearing up to release quarterly results are ConocoPhillips (COP - Free Report) , Chevron (CVX - Free Report) and EOG Resources Inc (EOG - Free Report) . ConocoPhillips, Chevron and EOG Resources are scheduled to report on Feb 2, Jan 29 and Feb 25, respectively. All the three stocks carry a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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Will ExxonMobil's (XOM) Upstream Business Hurt Q4 Earnings?
Exxon Mobil Corporation (XOM - Free Report) is geared up to release fourth-quarter 2020 results on Feb 2, before the opening bell. Since the integrated energy player has significant exposure to upstream business, the company is likely have borne the brunt of the year-over-year drop in commodity prices in the December quarter.
Upstream Business
ExxonMobil’s upstream businesses fall under core operations. This segment reflects the company’s activities related to exploring, and developing of oil and natural gas resources. Notably, from upstream operations, within and outside the United Sates, the energy giant reported a loss of $1.5 billion in the first nine months of 2020.
Upstream Performance in Q3
Non-U.S. Operation: During third-quarter 2020, ExxonMobil reported earnings of $298 million from upstream activities outside the United States. This marked deterioration from the year-earlier profit of $2.1 billion owing to lower commodity prices.
U.S Operation: From domestic operations, ExxonMobil reported a loss of $681 million against the year-ago quarter’s profit of $37 million. Lower prices hurt domestic operations.
Q4 Oil Price
The price of West Texas Intermediate (WTI) crude oil has improved roughly 25% through the December quarter of 2020. The approval of two coronavirus vaccines, which will probably help end the deadliest pandemic in more than a century, in the last month of the fourth quarter by the U.S. health regulators boosted investor confidence in fuel demand recovery, lifting crude price.
However, the pricing scenario was definitely not as healthy as the pre-pandemic fourth-quarter 2019 levels. In the December quarter of 2019, the price of WTI crude traded consistently above the $50-per-barrel mark. In comparison, through the fourth quarter of 2020, the commodity traded below the mark.
Thus, the dip in crude prices is likely to have hurt ExxonMobil’s upstream operations in the fourth quarter, in both international and domestic markets.
Forecast for Q4 Oil & Gas Production
The Zacks Consensus Estimate for fourth-quarter production is pegged at 3,674 thousand barrels of oil equivalent per day (MBoE/D), suggesting a decline from the year-ago quarter’s 4,018 MBoE/D.
Production of Crude & Natural Gas Liquids: The consensus estimate for world-wide net crude oil and liquids production is pegged at 2,244 thousand barrels per day (MBbl/D), indicating a decline from 2,436 MBbl/D in the year-ago quarter.
Natural Gas Production: The Zacks Consensus Estimate for world-wide natural gas production available for sale is pegged at 8,596 million cubic feet per day (Mcf/d), implying a decline from 9,495 Mcf/d in fourth-quarter 2019.
Upstream Profit to Deteriorate in Q4
Prices and production of commodities are the two key parameters that determine the fate of upstream operations. With oil equivalent production likely to have deteriorated and oil pricing scenario bleak as compared to the year-ago quarter, the Zacks Rank #3 (Hold) company’s earnings from upstream businesses are likely to have declined.
Non-U.S. Operation: The Zacks Consensus Estimate for earnings after taxes from non-U.S. upstream operations is pinned at $861 million, suggesting a decline from $6,069 million reported in the year-ago quarter.
U.S. Operation: The Zacks Consensus Estimate for after-tax loss from upstream operations in the domestic region is pegged at $229 million, indicating deterioration from profit of $68 million in the year-ago quarter.
Earnings & Revenue Projections
The weak upstream business is likely to have hurt the company’s results in the December quarter of 2020. Notably, the Zacks Consensus Estimate for fourth-quarter earnings of one cent per share suggests a decline of 97.6% year over year. Moreover, the Zacks Consensus Estimate for sales of $48.6 billion indicates a 27.7% year-over-year decrease.
Exxon Mobil Corporation Price and EPS Surprise
Exxon Mobil Corporation price-eps-surprise | Exxon Mobil Corporation Quote
Upcoming Releases of Other Energy Players
Other big energy giants, with significant upstream exposure, that are gearing up to release quarterly results are ConocoPhillips (COP - Free Report) , Chevron (CVX - Free Report) and EOG Resources Inc (EOG - Free Report) . ConocoPhillips, Chevron and EOG Resources are scheduled to report on Feb 2, Jan 29 and Feb 25, respectively. All the three stocks carry a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>