Exxon falls after oil warning, refining revenues achieve profits in the fourth quarter

(Bloomberg) — ExxonMobil shares fell after the company warned that fourth-quarter earnings will be affected by lower crude oil prices and tightening refining margins during the last three months of 2024.

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Oil prices reduced Exxon’s production division’s profits by about $700 million, while refining margins reduced its profits by another $500 million compared to the third quarter, Exxon said in a statement on Tuesday. Natural gas prices provided an increase of about $200 million while chemicals margins contracted.

The stock fell as much as 1.9% to $106.70 in New York. It was the fourth-worst performer in the S&P 500 Energy Index as of 12:08 p.m. Shell Plc also revealed lower fourth-quarter earnings earlier Wednesday.

Exxon’s update suggests fourth-quarter earnings per share will be about 17% below analysts’ current estimates, Nitin Kumar, an analyst at Mizuho, ​​wrote in a note. In particular, Exxon faces “significant headwinds” in its refining division, Biraj Purkataria, an analyst at RBC Capital Markets, wrote. The company has the largest refining footprint among its peers.

“We view this as a negative release and are consistent with the reviews we have seen for independent refiners and other large companies with significant exposure to refining,” Burcataria said.

Exxon’s guidance does not take into account operating performance or changes in production levels, but it is a sign that the fourth quarter was difficult for the oil majors. Investors are concerned about the Chinese economy amid abundant global crude oil supplies.

Exxon indicated that it would realize gains of $400 million from asset sales in the fourth quarter, along with fees of the same amount.

(Stock updates are in the third paragraph, and analyst comments start in the fourth paragraph.)

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