U.S. supermajors Exxon Mobil and Chevron prepare to close the door on 2023 with earnings and revenue reports early Friday. Saudi Arabia's state oil company Saudi Aramco announced earlier this week it would abandon a plan to expand oil production capacity.
Aramco, the world's largest oil exporter, said Tuesday that it will maintain its current output of 12 million barrels per day. That reversed an earlier plan to increase production to 13 million barrels per day by 2027.
In a statement, the company reported that it "has received a directive from the ministry of energy to maintain its maximum sustainable capacity (MSC) at 12 million barrels per day." Aramco added that it "update its capital spending guidance when its full-year 2023 results are announced in March."
Oilfield service stocks including Halliburton, SLB and Baker Hughes all fell on the news.
Meanwhile, U.S. and international benchmark oil prices traded down below $73 and $79 per barrel, respectively, on Wednesday after hovering around three-month highs early in the week as traders keep an eye on the situation in the Middle East.
While Saudi Arabia keeps production steady, investors turn to Exxon Mobil and Chevron's fourth-quarter earnings and revenue along with 2024 guidance, after both companies have already outlined cautious capital spending and production targets for the year.
Exxon Mobil stock edged down 0.4% while Chevron shares gained around 0.3% Thursday during market action. CVX is down less than 1% in 2024 while XOM has gained 2%.
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Wall Street predicts Exxon Mobil full-year EPS will fall 34% to $9.27 with sales declining 15% to $348.17 billion. Meanwhile, analysts expect Chevron 2023 earnings to dip 30% to $13.14 per share with revenue down 14% to $202.62 billion.
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Both Exxon Mobil and Chevron saw profit and revenue declines throughout 2023, as oil and natural gas prices weakened vs. prior-year levels which had driven higher by Russia's invasion of Ukraine.
Chevron and Exxon Mobil move into 2024 after making mega deals in the latter part of 2023. Exxon Mobil significantly expanded its Permian Basin holdings when it paid $60 billion for Pioneer Natural Resources in October.
Chevron quickly followed up with its $53 billion purchase of Hess, bolstering its share of Bakken Shale assets in Montana and North Dakota, as well as an Exxon-led project offshore from Guyana.
What's In Store For Exxon Mobil And Chevron In 2024?
Oil Production Amid Cloudy Demand Expectations
Crude oil demand appears set to increase in 2024 but at a slower pace, according forecasts by the Energy Information Administration (EIA), the Organization of the Petroleum Exporting Countries (OPEC) and The International Energy Agency (IEA). China, the world's largest oil importer, continues to face post-Covid economic challenges. The country's economic outlook is a key metric for the oil market, according to analysts.
Prior to Aramco's decision to end its production increase plan, Exxon Mobil had already planned to hold production steady, while leaning on its recent acquisitions to produce growth in 2024. However, Chevron appears set to increase oil output.
Exxon Mobil expects to produce about 3.8 million oil-equivalent barrels of oil and gas per day in 2024, rising to about 4.2 million oil-equivalent barrels per day by 2027, driven by growth in the Permian Basin and Guyana. Those numbers do not include output from PXD.
Analysts expect XOM's 2023 production to be 3.72 million barrels of oil equivalent per day, according to FactSet. Wall Street forecasts 4.12 million barrels of oil equivalent per day in 2024.
Meanwhile, analysts predict Chevron's 2024 production will be around 3.54 million barrels of oil equivalent per day in 2024, up approximately 14% compared to the 2023 expectation.
Exxon Mobil stock has a weak 26 Composite Rating from IBD. Chevron, a Dow Jones industrials component, has a Composite Rating of 21.
Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
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