Exxon Indicates Q2 Below Market Consensus, Pioneer Acquisition Excluded

Exxon Mobil Corp Predicts Lower Second-Quarter Profits Due to Refining Margins and Natural Gas Prices

Exxon Mobil Corp has indicated that its second-quarter profits are expected to decrease due to lower refining margins across the industry and reduced natural gas prices. Preliminary estimates suggest earnings per share between $1.50 and $2.40, translating to approximately $8.3 billion, which is 17% below market expectations. These projections do not include the additional oil and gas production from its recent $60 billion acquisition of Pioneer Natural Resources on May 3. The company did provide some insight into the impacts of the Pioneer deal, expecting an annualized capital expenditure of around $4.8 billion.

Operational and Financial Projections

Exxon anticipates that Pioneer will contribute between 500,000 and 550,000 barrels of oil equivalent per day (boepd) to its second quarter production, compared to the first quarter of the year. The complete financial results, which will encompass more than just operational outcomes, are scheduled for release on August 2. The leading U.S. oil producer has forecasted that results from its primary business—oil and gas—will see an increase due to higher oil prices, despite lower natural gas prices, expecting operational earnings of around $6.2 billion compared to $4.6 billion in the same quarter last year.

Impact of Lower Refining Margins

However, Exxon noted that lower refining margins are likely to negatively affect its second-quarter profits by $1.1 billion to $1.5 billion compared to the previous quarter. The effects of the Pioneer acquisition are to boost production significantly, having more than doubled to 1.3 million boepd since the deal's completion, up from 620,000 boepd in 2023. The full impact of this merger is expected in the third quarter. Exxon aims to triple its Permian production to 2 million boepd by 2027 using advanced drilling techniques.

Record Production in Guyana and Share Performance

Another positive note for Exxon is the record oil production in Guyana, where the company, along with its partners, reached a daily output of 663,000 boepd in May, surpassing the planned capacity by about 100,000 boepd. Despite these operational gains, Exxon shares have seen a slight dip of less than 1%, though they have increased by over 13% this year, slightly lagging behind the S&P 500's 16% rise but ahead of other major Western oil companies.

Future Financial Initiatives

Looking forward, Exxon has announced plans to ramp up share buybacks to a $20 billion run rate following the acquisition closure. The company had also anticipated a reduction in production by 40,000 boepd for the quarter due to scheduled maintenance, along with $3 billion in seasonal cash tax payments.