A sequential decline in global natural gas and oil prices during 3Q2019 is expected to impact quarterly profits for ExxonMobil Corp.
In a Form 8-K filing with the Securities and Exchange Commission (SEC) on Tuesday, which provided a preliminary outlook for third quarter results, the supermajor said a decline in commodity prices may weigh on results.
According to the SEC filing, the decline in liquids prices from 2Q2019 is expected to reduce upstream profits by 4-7 cents/share in 3Q2019, based on price data as of Sept. 19, ExxonMobil said. The prices may not reflect realized prices for the period, the company noted.
The preliminary review also indicates that the decline in natural gas prices from the second quarter could lead to an average loss/gain of 1 cent/share.
Henry Hub gas prices fell 2 cents/MMBtu from 2Q2019, as did Europe’s National Balancing Point price, ExxonMobil said. Japan Korea Marker gas prices, an indicator for the Asia Pacific liquefied natural gas spot market, fell 3 cents sequentially.
In addition, the major said a decline in North American crude logistics differentials from 2Q2019 is forecast to lead to a quarterly loss of 1-3 cents/share.
ExxonMobil is scheduled to issue its quarterly report on Nov. 1.
Analysts with Tudor, Pickering, Holt & Co. (TPH) in a note Wednesday said Wall Street has pegged ExxonMobil’s 3Q2019 earnings at 86 cents/share, while the producer’s preliminary forecast has profits of 65-70 cents.
ExxonMobil’s total earnings in 2Q2019 were $3.13 billion (73 cents/share), down 21% year/year but 33% higher than in 1Q2019.
“Relative to our estimates, the greatest deltas as highlighted in the 8-K came in the upstream segment, where the combined move in commodity prices and maintenance reduction resulted in less upside to estimates than forecast,” the TPH analysts said.
“On a positive note, in the downstream, lower maintenance and the combination of higher margins and tighter differentials look to have resulted in higher than forecast earnings, while chemicals results look to come in below our estimates on a lower uplift as a result of margin shifts and maintenance impacts quarter/quarter.”