Exxon Mobil and Dow Jones giant Chevron reported worse-than-expected third-quarter earnings early Friday. Both energy giants saw quarterly profit decline more than 40% as results ran up against earnings boosted by spiking oil prices during 2022.
Ahead of earnings, Exxon Mobil and Chevron had previously announced significant moves that bolstered their holdings in the Permian Basin and in South America, respectively. Chevron's purchase of Hess and Exxon Mobil's deal for Pioneer Natural Resources mark the oil industry's most intense consolidation in more than two decades.
In 2022, both Exxon Mobil and Chevron saw record profit on the back of surging oil and natural gas prices. U.S. oil prices and natural gas prices have eased somewhat in 2023. On Friday, U.S. crude prices gained around 1.4% to below $85 per barrel with an unclear demand outlook. Last week West Texas Intermediate prices advanced to around $90 per barrel as circumstances in the Middle East clouded the oil market.
Chevron stock, a Dow Jones component, sank 5.3% to 146.59 Friday during market action. On Thursday, CVX dropped 0.7% to 154.75. Meanwhile, S&P 500's ExxonMobil stock dropped 1.2% to 106.28 Friday. XOM shed 0.9% to 107.60 Thursday.
Exxon Mobil Stock: Earnings
Estimates: Analysts predicted XOM would see earnings fall 46% to $2.37 per share with revenue projected to decline 17% to $93.41 billion.
Earnings: Exxon Mobil EPS dropped 49% to $2.27 and sales contracted 19% to $90.76 billion.
Through Q3, Exxon Mobil's worldwide oil production is running flat compared to 2022. However, the company expects its full-year capital and exploration expenditures to be at the top end of its $23 billion-$25 billion guidance.
XOM's earnings and revenue declines were due to weaker margins and drop offs in natural gas and crude oil prices, according to the energy giant. Meanwhile, Exxon Mobil said the acquisition of Pioneer Natural Resources complements its previous $5 billion deal for Denbury.
"The two transactions we've announced further underscore our ongoing commitment to the 'and' equation by continuing to meet the world's needs for energy and essential products while reducing emissions," Chief Executive Darren Woods said in the earnings release.
"Pioneer will help us grow supply to meet the world's energy needs with lower carbon intensity while Denbury improves our competitive position to economically reduce emissions in hard-to-decarbonize industries," Woods added.
XOM Stock Performance
S&P 500 component Exxon Mobil stock is down 8.5% in October, trading below its 50-day and 200-day moving averages.
On Wednesday, JPMorgan lowered its XOM price target to 134, down from 137, and kept an overweight rating on the shares. JPMorgan told investors it was making the correction based on equity dilution from the PXD acquisition.
In Q2, Exxon Mobil profits fell 53% to $1.94 per share, sales decreased 28% to $82.91 billion. In Q1, Exxon Mobil earnings jumped 36% to $2.83 per share with revenue slipping 4% to $86.56 billion.
Exxon Mobil stock has a 72 Composite Rating of 99. The S&P 500 component has a 71 Relative Strength Rating and a 32 EPS Rating.
Dow Jones Stock: Chevron Earnings
Estimates: Wall Street expected Chevron EPS dropping 33% to $3.70 with sales decreasing 23% to $51.42 billion.
Results: Chevron reported Friday earnings fell 45% to $3.05 per share. Revenue declined 19% to $54.08 billion.
The company said the EPS decrease was due to lower upstream realizations and lower margins on refined product sales. Meanwhile, Chevron added its revenue drop came on the back of lower oil and gas prices.
Chevron's worldwide net oil-equivalent production was up 4% compared to 2022 mostly because of its $6.3 billion acquisition of PDC Energy, according to the release. Oil production in the U.S. totaled 1.41 million barrels of oil equivalent per day, up 20% vs. 2022, due to the addition of PDC's 179,000 oil-equivalent barrels per day and production increases in the Permian Basin.
Meanwhile, Chevron's refinery product sales also jumped 4% on higher demand for jet fuel in the quarter.
Chief Executive Mike Wirth in the earnings release Friday stressed Chevron has returned $20 billion to shareholders so far in 2023, 27% more than 2022.
"Chevron is delivering strong financial results while also investing to profitably grow our traditional and new energy businesses to drive superior value for shareholders," Wirth said.
CVX Stock Performance
Chevron stock has declined in five straight sessions, dropping below the 50-day and 200-day moving averages. Like XOM, CVX is down more than 8% in October. The Dow Jones stock is currently in a long-term consolidation.
In the second quarter, Chevron earnings dropped nearly 50% to $3.08 per share with revenue of $48.89 billion, down 29% vs. Q2 2022.
In Q1, Chevron topped Wall Street estimates, even as revenue slipped compared to a year ago. Earnings gained 6% to $3.55 per share in the first quarter. Sales dropped 6% to $50.79 billion. Higher margins on refined product sales drove the earning beat, the company said, partially offset by lower oil prices and rising production costs.
Chevron stock has a 48 Composite Rating of 99. The Dow Jones component has a 47 Relative Strength Rating and a 24 EPS Rating.
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