Global energy giant ExxonMobil (XOM, Financial) has announced that its second-quarter earnings are expected to decline by approximately $1.5 billion compared to the first quarter, primarily due to significant fluctuations in commodity prices. The Texas-based company highlighted that falling oil prices are projected to reduce profits by about $1 billion, while declining natural gas prices could result in an additional $500 million loss.
Similarly, European competitor Shell (SHEL) warned that its quarterly trading earnings would be "significantly lower" than previous periods, leading to a 3.3% drop in its stock price. These warnings reflect a broader industry downturn. After achieving record profits in 2022 and significantly increasing dividends and stock buybacks, energy companies are now struggling to cover expenses with free cash flow.
ExxonMobil noted that improved refining margins are expected to contribute around $300 million to quarterly earnings. The company emphasized that this guidance is based solely on market price changes and does not account for production adjustments or operational cost variations.
Analysts from RBC Capital Markets stated that ExxonMobil's forecast aligns with expectations for the second quarter, noting that its smaller trading business compared to Shell makes it less susceptible to similar issues.
