Exxon Mobil Expects $1.5B Q2 Earnings Hit from Lower Oil and Gas Prices.

Exxon Mobil expects a $1.5 billion drop in Q2 earnings due to lower oil and gas prices. The decline is attributed to an $800-$1.2 billion impact from falling liquids prices and a $300-$700 million hit from lower natural gas prices. However, refining margins may partially offset these challenges, potentially boosting earnings by $300 million. The company will report its Q2 earnings on August 1.

Exxon Mobil Corp. (XOM) has warned that lower oil and gas prices will significantly impact its second-quarter earnings. In a regulatory filing, the energy giant expects a profit drop of up to $1.9 billion compared to the first quarter. The earnings impact from falling liquids prices, which include crude, condensate, and natural gas liquids, is estimated to be between $800 million and $1.2 billion. Additionally, falling natural gas prices are expected to reduce profit by $300 million to $700 million. Exxon Mobil will report its second-quarter earnings on August 1.

The company's shares rose more than 1% after the news was released, and they are up about 5% year-to-date. However, the earnings warning highlights the challenges faced by Exxon Mobil in the current energy market. The price of benchmark Brent crude has dropped about 11% since the first quarter, averaging $66.71 per barrel during the second quarter. Natural gas prices are down 9% quarter-over-quarter, contributing to the overall decline in earnings.

Despite these challenges, Exxon Mobil expects refining margins to partially offset the impact of lower oil and gas prices. The company anticipates that refining margins could boost earnings by about $300 million. This optimism is supported by the fact that the company's refining margins improved sequentially in the first quarter, hinting at potential resilience in the sector.

The market reaction to Exxon Mobil's earnings warning has been mixed. While the company's shares have risen since the announcement, the broader energy sector has been volatile due to concerns about the sustainability of margins and the impact of regulatory headwinds. Investors are closely watching the company's ability to navigate these challenges and execute its strategic initiatives, such as cost savings and high-return assets.

Exxon Mobil's earnings warning is a reminder of the volatile nature of the energy market and the challenges faced by major oil and gas companies. The company's ability to adapt to these challenges and execute its strategic initiatives will be crucial in determining its long-term success.

References:
[1] https://finance.yahoo.com/news/exxonmobil-warns-falling-fuel-prices-140234082.html
[2] https://www.proactiveinvestors.com/companies/news/1074339/exxon-mobil-expects-1-5b-hit-to-q2-earnings-from-lower-oil-and-gas-prices-1074339.html
[3] https://www.ainvest.com/news/exxon-margins-pressure-strategic-shifts-sustain-2507/
[4] https://www.theglobeandmail.com/investing/markets/stocks/XOM/pressreleases/33305527/ubs-reaffirms-their-buy-rating-on-exxon-mobil-xom/