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Exxon Mobil's 1st Quarter Report Does Not Satisfy Company's Pre-Planned Agenda; Here's How CEO Has To Answer
Exxon's Q1 earnings report fell short of expectations, eventually citing challenges from refining margins and natural gas prices. The company's CEO remains optimistic despite the stock dip.
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Exxon's Q1 earnings miss expectations due to lower refining margins
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Despite challenges CEO Darren Woods emphasizes focusing on cash flow
Exxon Mobil, the oil industry titan, just posted its earnings for Q1 of 2019, and the results were mixed, to say the least. The numbers missed Wall Street’s expectations, but the revenue came in well above predictions. Nevertheless, shares of Exxon dipped more than 3 percent.
Earnings vs expectations and CEO’s take
Here are the numbers: $2.06 per share was slightly below an expected $2.20 per share, while revenue of $83.08bn beat anticipated revenue of $78.35bn and last year’s first-quarter revenue of $86.56bn.
Despite missing earnings expectations, CEO Darren Woods said he remains optimistic about the results because they still achieved what was laid out by corporate strategies. He blamed noncash tax and inventory adjustments for the miss and highlighted cash flow from operations that exceeded consensus by around a billion dollars.
Rough seas and impact on production
Eroding refining margins hurt Exxon this quarter, as did plunging natural gas prices, which fell 37% this year alone and squeezed profits at the country’s largest natural gas producer.
Chevron did not escape similar problems with its chemical arm, which it blamed for part of its first-quarter profit decline on Friday morning before markets opened.
Natural gas prices sank Exxon’s oil and gas production profits by 12% to $5.67bn as oil surged more than 16% this year, but not enough to pull up Exxon’s fortunes. Moreover, fuel earned 67% less money due to overstocked markets.
Guyana development and disputes
Exxon produced more than 600k barrels per day in Guyana territory waters this quarter, a new industry record, but Chevron bought Hess Corp instead of drilling with Exxon.
So now there may be some pre-emption rights questions surrounding the Guyana acreage that will need answers soon after Chevron announces it has acquired Anadarko.
Woods said the company has no interest in buying Hess but wants to find out what Chevron thinks Hess’s Guyana assets are worth. Chevron expects the deal to close by 2024. Watch this space.
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