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Oil giant ExxonMobil reported worse than expected first quarter earnings Friday before the market with higher maintenance hitting refining margins and chemical profits lower.

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ExxonMobil Inc. (NYSE: $XOM) Reported Earnings Before Open Friday

$0.55 Misses $0.70 EPS AND $63.63 Missed $64.82 billion revenue forecast

Earnings

Exxon Mobil Corp. (NYSE: XOM) reported Q1 earnings of 55 cents a share lower than 70 cents EPS expected Exxon earned $2.35 billion in the first quarter, compared with $4.65 billion a year ago. Revenues were $63.63 billion, down 6.7% from a year ago and short of analysts’ estimates for $64.82 billion. Exxon also saw capital and exploration expenses increase from $4.87 billion a year ago to $6.89 billion this quarter.

Exxon Mobil Corporation NYSE: $XOM

Market Reaction Pre-market $80.60 −1.62 (-1.97%)

Highlights

Upstream

• Crude prices strengthened during the quarter but remained weaker, on average, than the fourth quarter of 2018. North American differentials narrowed, largely as a result of imposed production curtailments in Canada and additional takeaway capacity in the Permian. • Natural gas prices were impacted by warmer weather. • Production volumes benefited from continued unconventional growth. However, first quarter production was negatively impacted by lower Kearl output in Canada and downtime.

Downstream

• ExxonMobil achieved first sales of on-specification Group II basestocks from the advanced hydrocracker at the Rotterdam refinery in the Netherlands. The new unit uses proprietary catalyst in a unique refining configuration to upgrade lower-value vacuum gas oil into higher-value EHC™ Group II basestocks and ultra-low sulfur diesel. • Weak industry fuels margins from high gasoline inventory levels and narrowed North American crude differentials impacted results in the quarter. • Overall heavy scheduled maintenance remained at similar levels to the fourth quarter of 2018.

Chemical

• Sales volumes increased from the prior year quarter reflecting project growth, however, margins remained challenged with continued supply length from recent industry capacity additions.

Strengthening the Portfolio

• ExxonMobil made two additional discoveries offshore Guyana at the Tilapia-1 and Haimara-1 wells during the first quarter. In April, the company also announced a new discovery at the Yellowtail-1 well, marking the 13th discovery on the Stabroek Block. • ExxonMobil made a natural gas discovery offshore Cyprus in the Eastern Mediterranean at the Glaucus-1 well. Based on preliminary interpretation of the well data, the discovery could represent an in-place natural gas resource of approximately 5 trillion to 8 trillion cubic feet (142 billion to 227 billion cubic meters). Further analysis is required to better determine the resource potential.

 ExxonMobil has revised its Permian Basin growth plans to produce more than 1 million oil-equivalent barrels per day by as early as 2024. The size of the company’s resource base in the Permian is approximately 10 billion oil-equivalent barrels and is likely to grow further as analysis and development activities continue.

Permian updates are what investors want. After the huge acerage buys at the start of last year Exxon announced last quarter another 22,000 net acres in the Permian Basin since split between the Midland Basin and the Delaware Basin. Guyana is another region we want to hear updates on. LNG and natural gas updates along with its massive polyethylene production expansion in Mont Belvieu are all areas to watch in this intergrated major.

 

ExxonMobil Huge Liza Field Acerage in Guyana

$XOM made a final investment decision during 2Q17 to proceed with the Liza field development located offshore Guyana, where production is expected to start in 2020. The company expects Liza to add up to 120,000 barrels of oil per day to $XOM's production.

Liza HESS EXXON

 

Source: ExxonMobil, Alpha Street

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