June 13, 2024
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Weak First Quarter Results for Big Oil

U.S. and European oil companies have reported weaker first-quarter results on Friday, primarily due to a significant decline in natural gas prices compared to the same period last year.

These results mark a retreat from the record levels achieved in 2022, which were bolstered by increased demand following the COVID-19 pandemic and subsequent spikes in prices after Russia’s invasion of Ukraine.

According to Reuters, Exxon Mobil missed Wall Street’s earnings targets, while Chevron’s results surpassed tempered expectations, largely driven by better-than-expected U.S. oil production.

Similarly, French oil major TotalEnergies slightly exceeded analysts’ forecasts, with favorable refining margins offsetting a notable 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.

According to company statements, Exxon’s profits fell by 28%, Chevron’s by 16%, and TotalEnergies’ by 22% year-on-year. The two U.S. oil majors also experienced weaker profits from gasoline and fuels.

Henry Hub futures, the U.S. gas benchmark, have been trading below $1.70 per million British thermal unit (mmBtu), reaching a 3-1/2-year low earlier this year due to warm weather and oversupply.

TotalEnergies Reports Decline in Q1 Earnings

Equinor Reports Lower Q1 Profit amidst Declining Natural Gas Prices

While global benchmark Brent crude prices remained largely flat compared to a year ago, currently at around $90 per barrel, higher oil prices are expected to lead to decreased profitability in the refining business in the second quarter and beyond, according to TotalEnergies.

Last year’s robust profits prompted Exxon, Chevron, and Occidental Petroleum to bid for rivals in hopes of boosting oil and gas production.

Exxon reported a $8.5 billion profit, Chevron earned $5.5 billion, and TotalEnergies delivered $5.1 billion in adjusted net profit for the first quarter.

Despite the profit declines, TotalEnergies’ shares rose 2.09% in Paris after confirming a $2 billion share buyback.

However, executives offered no new guidance on production outlooks for the coming quarters, which, in part, depend on pending approvals for two major acquisition deals.

Exxon aims to close its purchase of Pioneer Natural Resources in the current quarter, while Chevron’s offer for Hess is moving ahead, expected to be put for a shareholder vote in late May.

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