Exxon misses on Q1 profit despite big gains in Guyana

By Thomson Reuters Apr 26, 2024 | 5:38 AM

By Sabrina Valle

HOUSTON (Reuters) – Exxon Mobil Corp on Friday missed analysts’ estimates with a 28% year-on-year drop in first quarter profits as weaker refining margins and lower natural gas prices offset volume gains.

The largest U.S. oil company, which is in the process of closing a $60 billion deal for top shale oil producer Pioneer Natural Resources, posted first-quarter earnings of $8.22 billion, or $2.06 per share, compared to an $11.43 billion net profit a year ago.

Profit per share fell 6% shy of Wall Street analysts’ consensus, according to LSEG estimates.

The results were the second highest for a first quarter in the past decade, behind the year-ago period, said Chief Financial Officer Kathryn Mikells. The miss was due in part to tax and inventory balance sheet adjustments, she said.

“Every quarter, we have some pluses and minuses associated with these one-off items”, she said. “Sometimes they are favorable, this time they were unfavorable.”

Weaker energy margins cut operating profit by about $2.6 billion compared with a year ago. Global oil prices were largely flat against a year ago while natural gas prices fell sharply. U.S. gas futures traded 20% lower at the end of the quarter compared to a year-earlier.

Results were boosted by lower costs and higher volumes from Exxon’s Guyana operations. Hess a day earlier flagged the increase in output in the South American country with a 70% year-over-year output gain.

Exxon’s capital spending last quarter was the lowest in seven quarters and its streamlining of operations expanded what it calls structural cost savings by $400 million.

It added $1.7 billion in cash last quarter to end the period with $33.3 billion.


Exxon’s acquisition of Pioneer is expected to wrap up in coming weeks. Exxon has started the integration process with a team working separately from the business, Mikells said.

“We are feeling really good about our interactions with the Pioneer people and making sure that we put our best foot forward as we close this transaction,” she said.

The all-stock deal for Pioneer would make Exxon the largest oil and gas producer in the top U.S. shale field, doubling output there to more than 1.3 million barrels of oil equivalent per day. Exxon forecasts the combination will allow it to reach 2 million barrels per day in 2027.

That deal was the largest among a series of blockbuster combinations in recent years, as wildcatters including Pioneer, Endeavor Energy and CrownRock were acquired by bigger companies which sought to lock in years of future production and achieve economies of scale from expanded operations.

Pioneer’s shares this week traded at $275 apiece, a 9% increase to their October deal value.


Exxon is in a dispute with Chevron and Hess over assets in Guyana, home to the biggest oil finds in the past two decades. In face of Chevron’s $53 billion offer for Hess, Exxon has claimed preemption rights over Hess’ Guyana assets. That claim is being considered by an international arbitration panel.

Hess’ 30% stake in the Guyana joint venture is the prize in Chevron’s proposed takeover.

Mikells said Exxon and partner CNOOC Ltd will “evaluate our options” if the arbitration panel agrees that they have the first of first refusal to a sale.

“It is all about clarifying our contractual rights, period,” she said.

(Reporting by Sabrina Valle; Editing by Sonali Paul)