• 3 minutes Will Iron-Air batteries REALLY change things?
  • 7 minutes Natural gas mobility for heavy duty trucks
  • 11 minutes NordStream2
  • 6 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 1 hour U.S. Presidential Elections Status - Electoral Votes
  • 46 mins Evergrande is going Belly Up.
  • 42 mins Monday 9/13 - "High Natural Gas Prices Today Will Send U.S. Production Soaring Next Year" by Irina Slav
  • 6 hours Is China Rising or Falling? Has it Enraged the World and Lost its Way? How is their Economy Doing?
  • 2 days Poland Expands LNG Powered Trucking and Fueling Stations
  • 2 days World’s Biggest Battery In California Overheats, Shuts Down
  • 1 day The unexpected loss of output from wind turbines compels UK to turn to an alternative; It's not what you think!
  • 16 hours Ten Years of Plunging Solar Prices
  • 20 hours Extraction of gasoline from crude oil.
  • 3 days The coming Cyber Attack
  • 3 days Is the Republican Party going to perpetuate lies about the 2020 election and attempt to whitewash what happened on January 6th?
  • 3 days Ozone layer destruction driving global warming
  • 3 days 'Get A Loan,' Commerce Chief Tells Unpaid Federal Workers

Breaking News:

UN Climate Conference Snubs Big Oil

OPEC May Cut 2022 Oil Demand Forecast

OPEC May Cut 2022 Oil Demand Forecast

OPEC could revise down its…

Iraq Secures New Investments In Its Booming Oil Industry

Iraq Secures New Investments In Its Booming Oil Industry

Oil-rich Iraq is finally showing…

ZeroHedge

ZeroHedge

The leading economics blog online covering financial issues, geopolitics and trading.

More Info

Premium Content

Here’s Why Analysts Expect Record-High Earnings For ExxonMobil

Surging prices for plastics are likely to help Exxon's petrochemicals division post record-high earnings this week when the company reports its earnings.

Items like flooring, roofing and packaging all saw demand remain firm throughout the pandemic. This helped keep a bid under the price of the commodity while the "lockdown trade" pulled the rug out from under the bid of other items, like vacations and corporate real estate. Chemical ingredients like polyethylene and polyvinyl chloride used to make plastics have seen record-high prices this year. Limited supply and bottlenecked shipping are adding to the price momentum. 

Expectations for Exxon's upcoming earnings report are that the company will show "a radical financial transformation from last year," according to Bloomberg this week. With higher oil prices as an obvious tailwind, the supermajor is expected to have generated enough cash to pay its dividend for a second straight quarter, moving away from the habit of borrowing to fund the distribution.

Morgan Stanley has even said that the company has its "best dividend coverage in a decade".  

Matt Murphy, an analyst at Tudor, Pickering, Holt & Co. told Bloomberg: “Chemicals has certainly been a noteworthy area of continued improvement for the majors and Exxon in particular. It’s an area that hasn’t tended to get a ton of focus in the past, but it’s providing strong support for free cash flow across the group.”

Bloomberg analysts estimate Exxon's chemicals segment brought in about $1.94 billion in Q2. 

Related: Can Iran Avoid A Major National Uprising?

Shell and Chevron should also see a rise in profit as a result of the rising prices, Bloomberg notes, but Exxon stands out from the group as the "biggest winner" thanks to the large size of its chemicals division. Exxon currently has chemical facilities on the U.S. Gulf Coast, in Rotterdam, and in Singapore. It is currently expanding into Texas and China. 

Zachary Moore, a market analyst for data provider ICIS, said: “Strong earnings should continue for the remainder of this year. Changes in consumer behavior such as more online shopping and at-home dining may make a permanent jump of around 2-3% in overall demand for polyethylene packaging.”

Paul Cheng, an analyst at Scotiabank, added: “This quarter will have gangbuster chemical earnings, but it probably marked the peak and will come off in subsequent quarters.” Cheng attributes his predictions for a peak, followed by a pullback, to supply chains loosening up and facilities recovering from outages. 

Earnings are also expected to be helped along by cuts in spending put into place by Exxon Chief Executive Officer Darren Woods, who aims to scale back growth spending by $10 billion per year, out to 2025. The cuts have allowed Exxon "to harvest large cash flows from this year’s higher oil and gas prices," the report says. 

Exxon is set to report earnings on Friday. In Q1, the company's chemical segment reported its highest profit in almost a decade.

By Zerohedge.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News