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ExxonMobil Warns of $1B Hit to Q3 Earnings Amid Falling Oil Prices
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Exxon Mobil Corporation (XOM - Free Report) has issued a warning regarding its third-quarter financial results, indicating a negative impact due to declining oil prices and refining margins from the second quarter. In its regulatory filing, XOM outlined the potential effects on its earnings across various segments.
The company anticipates a decrease in crude prices to reduce $600 million to $1 billion in upstream profit. Similarly, changes in industry margins for energy products are expected to have a comparable impact. Then again, gas prices might either improve upstream earnings by $200 million or reduce them by the same amount.
Lower refining margins are projected to reduce third-quarter earnings by up to $1 billion. For each segment, earnings from specialty and chemical products are estimated between breakeven and $200 million.
Despite these challenges, ExxonMobil made $9.2 billion in the second quarter of 2024 and $9.1 billion in earnings in the third quarter of 2023. While oil prices fell throughout the third quarter of 2024, hitting their lowest levels since January 2024 due to softening global demand, particularly from China, the demand in the United States remained unexpectedly strong. The Energy Information Administration reported a four-year high in domestic oil demand during the summer.
International oil prices were, on average, 17% lower in the third quarter than in the second quarter. This decline primarily reflects the global demand downturn, although geopolitical tensions, especially with the ongoing conflict in the Middle East, have recently led to a rebound in prices.
ExxonMobil will release its official third-quarter results on Nov. 1, 2024, when these estimates will be fully reflected.
XOM’s Zacks Rank & Key Picks
ExxonMobil currently carries a Zack Rank #3 (Hold).
Delek Logistics Partners (DKL - Free Report) is a provider of gathering, pipeline, transportation and other services for the energy market. DKL’s expected earnings growth rate for the current year is 5.6%.
The Zacks Consensus Estimate for DKL’s 2024 EPS is pegged at $3.41. The company has a Value Score of B. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 60 days.
Talos Energy LLC (TALO - Free Report) engages in the exploration, development, and production of oil and natural gas properties. It operates primarily in the Gulf of Mexico and the shallow waters off the coast of Mexico.
TALO’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed the same twice, the average surprise being 14.72%. The company has a Value Score of A. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 60 days.
Targa Resources Corp. (TRGP - Free Report) is a premier energy infrastructure company. A leading provider of integrated midstream services in North America, the Houston, TX-based operator primarily derives its revenues from gathering, compressing, treating, processing and selling natural gas.
The Zacks Consensus Estimate for TRGP’s 2024 EPS is pegged at $5.90. It has witnessed upward earnings estimate revisions for 2024 in the past seven days.
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ExxonMobil Warns of $1B Hit to Q3 Earnings Amid Falling Oil Prices
Exxon Mobil Corporation (XOM - Free Report) has issued a warning regarding its third-quarter financial results, indicating a negative impact due to declining oil prices and refining margins from the second quarter. In its regulatory filing, XOM outlined the potential effects on its earnings across various segments.
The company anticipates a decrease in crude prices to reduce $600 million to $1 billion in upstream profit. Similarly, changes in industry margins for energy products are expected to have a comparable impact. Then again, gas prices might either improve upstream earnings by $200 million or reduce them by the same amount.
Lower refining margins are projected to reduce third-quarter earnings by up to $1 billion. For each segment, earnings from specialty and chemical products are estimated between breakeven and $200 million.
Despite these challenges, ExxonMobil made $9.2 billion in the second quarter of 2024 and $9.1 billion in earnings in the third quarter of 2023. While oil prices fell throughout the third quarter of 2024, hitting their lowest levels since January 2024 due to softening global demand, particularly from China, the demand in the United States remained unexpectedly strong. The Energy Information Administration reported a four-year high in domestic oil demand during the summer.
International oil prices were, on average, 17% lower in the third quarter than in the second quarter. This decline primarily reflects the global demand downturn, although geopolitical tensions, especially with the ongoing conflict in the Middle East, have recently led to a rebound in prices.
ExxonMobil will release its official third-quarter results on Nov. 1, 2024, when these estimates will be fully reflected.
XOM’s Zacks Rank & Key Picks
ExxonMobil currently carries a Zack Rank #3 (Hold).
Investors interested in the energy sector may look at some better-ranked stocks that currently flaunt a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Delek Logistics Partners (DKL - Free Report) is a provider of gathering, pipeline, transportation and other services for the energy market. DKL’s expected earnings growth rate for the current year is 5.6%.
The Zacks Consensus Estimate for DKL’s 2024 EPS is pegged at $3.41. The company has a Value Score of B. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 60 days.
Talos Energy LLC (TALO - Free Report) engages in the exploration, development, and production of oil and natural gas properties. It operates primarily in the Gulf of Mexico and the shallow waters off the coast of Mexico.
TALO’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed the same twice, the average surprise being 14.72%. The company has a Value Score of A. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 60 days.
Targa Resources Corp. (TRGP - Free Report) is a premier energy infrastructure company. A leading provider of integrated midstream services in North America, the Houston, TX-based operator primarily derives its revenues from gathering, compressing, treating, processing and selling natural gas.
The Zacks Consensus Estimate for TRGP’s 2024 EPS is pegged at $5.90. It has witnessed upward earnings estimate revisions for 2024 in the past seven days.