Oil and gas company, Exxon Mobil, a major player in Nigeria’s oil and gas sector witnessed a three per cent drop in its share price after it missed analysts’ earnings estimate in the second quarter. The company reported earnings of $4 billion, or $0.92 a share, that missed analysts’ estimate of $1.24 a share. In three of the last four quarters, the company failed to beat the consensus earnings estimate.
While profits saw a miss, revenue beat market expectations. Total revenue and other income during Q2 came in at $73.5 billion versus the estimated $72.58 billion. “Second quarter results were primarily impacted by significant scheduled maintenance undertaken to support operational integrity,” said CEO Darren Woods.
Exxon’s plan to spend more than $200 billion to 2025 on new projects “might be the right thing for the business but that doesn’t mean it’s the right thing for the stock for the next 12 months,” Bloomber quoted Jason Gammel, a London-based analyst at Jefferies LLC, to have said by phone. Investors want “stable earnings and cash flow performance and returning cash to shareholders.”
Exxon, which has prioritised big project investment in Latin America and elsewhere, failed to live up to earnings, cash flow, debt and output expectations, reporting net income of $3.95 billion compared with expectations of $5.35 billion. In explaining the lower production estimate, Senior Vice President Neil Chapman said the figure took into account earthquake damage in Papua New Guinea that interrupted natural gas output.
“It’s not a big deal but it’s important to highlight what it is,” Chapman was quoted by Bloomberg to have said during a conference call with analysts. “We’re not focused on volumes. We’re focused on value.”
Exxon failed to fully capitalise on a Brent crude price that was almost 50 percent higher than a year earlier.
Exxon produced the equivalent of 3.6 million barrels of oil in the second quarter, well short of the 3.83 million expected by analysts, the Irving Texas-based company said in a statement. Maintenance and repairs at undisclosed oil fields more than offset output gains from U.S. shale and offshore Canadian assets, the company said.
Exxon’s results also took a hit from prolonged refinery repairs that hurt the company’s ability to cash in on swelling margins from processing oil into fuels, Chapman said.
“We’re not happy with the reliability performance” of Exxon’s refining fleet, said Chapman, a member of the 4-person management committee that oversees day-to-day operations along with CEO Darren Woods. There’s no “underlying deteriorating performance” issues.
Chevron, meanwhile, reported earnings of $3.41 billion, compared to a $3.94 billion forecast. And its $3 billion buyback announcement fell short of a similar announcement by Royal Dutch Shell Plc a day earlier.