Wrapup 2: Earnings for Big Oil backpedal as natgas prices tumble
26/04/2024 19:27
(Adds TotalEnergies CFO quote in paragraph 5, updates shares in
paragraph 12)
By Sabrina Valle
HOUSTON, April 26 (Reuters) - U.S. and European oil
companies reported weaker first quarter results on Friday due to
a sharp drop in natural gas prices compared with a year ago.
Results at oil and gas firms are still retreating from
record levels in 2022 that were boosted by a surge in demand
after the COVID-19 pandemic and then when prices spiked after
Russia invaded Ukraine.
In the U.S., Exxon Mobil XOM.N missed Wall Street earnings
targets on fuel derivatives and Chevron CVX.N beat tempered
expectations with better-than-expected U.S. oil production.
French oil major TotalEnergies TTEF.PA also slightly beat
analysts forecasts as good refining margins partially offset a
steep drop in profits from natural gas.
"European gas prices declined by 35%, reflecting a mild
winter and high storage levels," said TotalEnergies Chief
Financial Officer Jean-Pierre Sbraire.
Exxon's profit fell 28%, Chevron decreased 16% and
TotalEnergies was down 22% year-on-year, with the two U.S. oil
majors also taking a toll from weaker profits from gasoline and
fuels.
Henry Hub futures NGc1 , the benchmark for U.S. gas, has
been trading below $1.70 per million British thermal unit
(mmBtu), and earlier this year dropped to a 3-1/2-year low on
warm weather and oversupply.
Global benchmark Brent crude prices LCOc1 were largely
flat against a year ago at $81.76 a barrel in the quarter.
But higher oil prices — currently trading around $90 — means
lucrative oil refining margins from early this year are set to
fall, with TotalEnergies expecting its refining business to be
less profitable in the second quarter and beyond due to
geopolitical tensions and OPEC+ production limits.
Last year's strong profits led Exxon, Chevron, Occidental
Petroleum OXY.N to bid for rivals hoping to generate higher
oil and gas production.
Exxon posted an $8.5 billion profit, its second highest for
the first quarter in more than a decade, while Chevron earned
$5.5 billion and TotalEnergies delivered $5.1 billion in
adjusted net.
Share prices reflected the profit drops, with Exxon down
2.6% and Chevron falling less than 1% in late New York trading.
TotalEnergies' shares closed up 2.09% in Paris after it
reconfirmed a $2 billion share buyback.
Executives offered no new guidance on their production
outlooks for coming quarters on conference calls, giving
investors less reason to cheer.
In part, the two largest U.S. oil companies' outlook depends
on pending approvals for two bid deals.
Exxon aims to close its purchase of Pioneer Natural
Resources PXD.N in the current quarter, it said.
Chevron said its offer for Hess HES.N is moving ahead. The
deal is expected to be put for shareholder vote in late May, and
an arbitration process with Exxon that is blocking the sale
should be concluded in the fourth quarter.
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Oil majors take a hit from lower natural gas prices https://reut.rs/3WhsF7I
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(Reporting by Sabrina Valle in Houston, America Hernandez in
Paris and Mrinalika Roy in Bengaluru
Editing by Marguerita Choy)
((Sabrina.valle@thomsonreuters.com; +1 469-691-7668;))