HOUSTON (Reuters) – Exxon Mobil (XOM) has signaled sharply lower oil refining profits and weakness across all its businesses would reduce its fourth-quarter earnings by about $1.75 billion from the prior quarter. The oil major also indicated that upstream asset sales could benefit results by approximately $400 million, but overall impairments would cost about $600 million. The company’s filing did not specify a reason for the impairments.
Earnings Overview
NYSE quotes indicate delayed data for XOM (EXXON MOBIL), with the stock trading at 111.33, reflecting an upward movement of +(1.07%). Advanced chart analysis is available for further insights. Exxon’s financial performance has drawn close attention as a gauge for how other major oil companies will fare when they release their earnings reports later this month.
Profit Expectations
According to financial firm LSEG, Exxon is projected to report a profit of $1.76 per share for the fourth quarter, down from $2.48 per share in the same quarter last year. Analyst Biraj Borkhataria noted that Exxon’s earnings snapshot indicated profits "well below consensus," with "significant headwinds" in refining operations highlighted by his firm RBC Capital Markets.
Downside Factors
Exxon disclosed that oil refining margins would cut earnings by between $300 million and $700 million from the third-quarter level. Additionally, timing effects were anticipated to further reduce profits by another $500 million to $900 million. This underscores the challenges posed by global demand trends and market supply dynamics.
Market Dynamics
Demand for gasoline and diesel has lagged expectations globally, while new oil refineries in Asia and Africa have contributed to excess supplies in the market. U.S. fuel stockpiles expanded during the quarter as refiners maintained elevated utilization rates despite weaker-than-expected demand.
Oil Price Fluctuations
Oil prices declined approximately 6% in the fourth quarter compared to the prior three months, dropping nearly 12% from a year ago. Traders expressed concerns over global oil demand, with natural gas prices rising about 30% in the same period partially offsetting some of the decline in crude oil prices.
Industry Context
The industry bellwether reported $8.6 billion in earnings for the third quarter, while its adjusted profit stood at $9.96 billion for the year-ago fourth quarter. Exxon also highlighted lower margins in its chemicals business, which would further reduce earnings by about $400 million compared to the prior quarter.
Earnings Release Details
The company is set to release its final results on January 31, with the SEC filing now incorporating all available data and analysis into its presentation of fourth-quarter results. This marks a significant opportunity for investors to gauge Exxon’s performance against market expectations and assess its position within the broader energy sector.
Market Reactions
Given the mixed signals regarding profitability and market conditions, traders are closely monitoring Exxon’s performance. The delayed quote reflects the stock’s current value, which is influenced by recent market developments and investor sentiment.
In summary, Exxon Mobil’s fourth-quarter earnings present a challenging picture for investors, with significant impacts from refining margins, upstream sales, and impaired assets. The company’s ability to navigate these headwinds will be crucial in determining its long-term viability within the competitive energy landscape.
