HOUSTON (Reuters) – Weaker crude oil and gas prices drove quarterly results sharply lower at Exxon Mobil Corp and Chevron Corp, pushing down shares at the two largest U.S. oil producers and signaling a weak start to the new year.
FILE PHOTO: A logo of the Exxon Mobil Corp is seen at the Rio Oil and Gas Expo and Conference in Rio de Janeiro, Brazil September 24, 2018. REUTERS/Sergio Moraes
While one-time asset sales or write downs were large factors, the two companies said earnings suffered from weaker margins in crude oil, chemicals and fuel production. They gave tepid outlooks for the near term.
Shares of Exxon and Chevron were both at least 3% lower in morning trade on the results and worries about slowing global economic growth.
Fourth-quarter results at Exxon (XOM.N) fell below Wall Street’s recently lowered estimate, with earnings sliding to $5.6 billion from $6 billion a year ago. Per share profit excluding one-time gain from asset sales was 41 cents, below Wall Street’s estimate of 43 cents and 71 cents prior to a recent warning.
Chevron (CVX.N) swung to a loss of $6.61 billion from a year-earlier profit of $3.73 billion. The company had $10 billion in charges including writedowns on the value of oil and gas properties that were no longer economic to pump. Excluding charges, its $1.49 cent a share profit topped estimates.
This week, Royal Dutch Shell’s shares hit a three-year low after it laid out a plan to pull back on share buybacks amid slower global growth and weak commodity prices.
Exxon CEO Darren Woods said its natural gas, refining and chemicals businesses have suffered from prices near or at decade lows. Exxon will keep investing in new projects on the belief that a growing global middle class will drive demand for its products, Woods said, describing the margin weakness as “a short-term impact.”
Exxon and Chevron are racing in the Permian Basin, the top U.S. shale field, to reach 1 million barrels per day of production, but neither is anywhere near that level right now.
Exxon’s output rose 54% from a year ago to around 294,000 barrels of oil and gas daily, while Chevron is pumping 514,000 barrels daily, up 36% in a year. Both companies have a goal of 1 million bpd within a few years.
Values are down across the oil and gas sector, prompting ongoing speculation that large companies will acquire smaller ones in the Permian Basin. Woods, though, said that the best opportunities are usually the ones “that you can generate organically,” while Chevron CEO Mike Wirth repeated a pledge to maintain capital discipline.
Reporting by Jennifer Hiller and Gary McWilliams; Editing by David Gregorio