Exxon Mobil (XOM) and Chevron (CVX) will announce first-quarter earnings and revenue early Friday as the two US supermajors continue to squabble over Chevron’s attempt to move into oil-rich Guyana. Both XOM stock and Chevron stock initially edged lower Thursday. But, like many other companies, they recovered for a small gain for the day Thursday.
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Analysts expect Exxon Mobil Q1 EPS to fall 23% to $2.19 with sales declining 8% to $79.69 billion, according to FactSet. On April 3, Exxon Mobil reported that it expects Q1 operating results to fall compared to Q4 2023 on lower oil and gas prices. The company forecast around $6.6 billion in operating profit for Q1, down from $11.6 billion in Q1 2023 and $7.63 billion in Q4, according to federal filings.
Meanwhile, Wall Street predicts an 18% drop in Chevron’s Q1 earnings, to $2.92 per share, with revenue totaling $48.42 billion, down 5% compared to last year’s first quarter.
Both Exxon Mobil and Chevron saw profit and revenue declines throughout 2023, as oil and natural gas prices weakened vs. prior-year levels which were driven higher by Russia’s invasion of Ukraine.
In early February, Exxon Mobil and Chevron forecast nearly flat oil production for 2024 compared to 2023 levels. Chevron expects production to increase 4%-7% compared to its 3.12 million barrels of oil equivalent per day in 2023. At the same time, Exxon reported plans for a less-than-2% production increase for average net production of about 3.8 million barrels of oil equivalent per day in 2024, vs. 3.74 million barrels of oil equivalent per day in 2023.
Exxon Mobil stock edged down 0.7% to 120.20 while Chevron stock dropped a fraction to 163.50 during market action Thursday.
Exxon Mobil Vs. Chevron: Guyana
Toward the end of 2023 Chevron agreed to acquire hess (HES) for $53 billion, giving the supermajor a share of the Exxon-led project offshore from Guyana.
The energy industry touts offshore Guyana, a resource pioneered by Exxon, as the largest oil discovery in the last 10 years.
Exxon Mobil holds a 45% stake in Guyana’s Stabroek block, the largest area under development. China’s CNOOC International holds a 25% interest in the project with Hess holding a 30% stake. The Exxon-led venture has been drilling 18,000-foot-deep wells, with drillships working in water as deep as 8,900 feet.
Exxon Mobil’s affiliate Esso Exploration & Production Guyana Limited is the consortium operator. The area off Guyana’s coast reports estimated recoverable resources of more than 11 billion barrels of oil equivalent.
Guyana is expected to produce more than 1 million barrels per day (bpd) by 2026, according to industry projections.
Currently, Hess’ share of net production is about 110,000 bpd. Exxon Mobil is producing around 400,000 bpd in Guyana. Exxon expects output of 1.2 million bpd by the end of 2027.
For comparison, the Energy Information Administration (EIA) estimates the Permian Basin in west Texas and New Mexico will produce more than 6 million barrels of oil per day in April. It is estimated to hold 50 billion recoverable barrels in the Wolfcamp and Bone Spring formations alone.
Exxon Mobil: Right Of First Refusal
However, Guyana has become a zone of contention, with Exxon claiming it has the right to first refuse to acquire Hess’ stake in the Stabroek block.
Exxon Mobil and CNOOC on March 26 merged arbitration claims against Chevron’s Hess acquisition. Meanwhile, Hess said in a regulatory filing that Chevron’s acquisition could be delayed until October 2025 due to the arbitration case.
Chevron and Hess believe the right of first refusal in the Stabroek joint agreement does not apply to the deal due to the structure of the merger.
Chevron Chief Executive Mike Wirth said in a recent interview with Veriten’s Maynard Holt that Chevron “still fully expects to close the transaction.”
“It looks like it’ll take a little bit more time now, because the arbitration may become the rate-defining factor,” Wirth said.
“I think this is fair, international arbitration will take some time. We’re prepared for it. We look forward to affirming our interpretation of the contract and closing the transaction,” he added.
The Chevron chief added that they are also working with the Federal Trade Commission (FTC) to “satisfy their concerns.”
Hess Earnings Surprise Wall Street
Meanwhile, early Thursday Hess reported better-than-expected earnings and revenue, with EPS surging 180% to $3.16 and sales increasing 38% to $3.34 billion.
Hess credited its profit growth on higher production volumes in Q1. The company’s oil and gas net production jumped to 476,000 barrels of oil equivalent per day, up by 27% from 374,000 in Q1 2023.
Hess production in the Bakken increased by 17% to 190,000 boe per day, while production in Guyana ballooned 70% to 190,000 boe daily, up from 112,000 boe in Q1 last year.
XOM And Chevron: Stock Performance And Oil Prices
XOM shares have been grinding against resistance around 120, capping the stock’s gains since February last year. In 2024, Exxon Mobil stock has rebounded more than 20% from lows.
Chevron has gained around 10% this year. Chevron stock hit its record high of 189.68 in November 2022. Rather than repeatedly rising to retest that level, like Exxon has, Chevron has posted a series of declining highs. The stock traded 13% below its 2022 record as of Thursday.
Meanwhile, geopolitical risk in the Middle East, uncertain signals of demand growth in China and rising US stockpiles have had a push-pull effect on oil prices in recent weeks. US prices have settled back around $82 per barrel as concerns eased over direct confrontation between Israel and Iran. Futures for Brent crude, the international benchmark, traded below $88 per barrel Thursday.
Switzerland-based UBS expects fossil fuels, including crude oil, will be an important part of the globe’s energy mix for years to come. The bank recently wrote that oil demand will likely rise into the 2030s even as the overall market share will “increasingly give way” to renewables.
Exxon Mobil stock has a 58 Composite Rating out of a best-possible 99. XOM also has a 79 Relative Strength Rating and a 14 EPS Rating.
Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
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