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Exxon, Chevron Earnings Slump On Weak Refining Margins

U.S. supermajors ExxonMobil and Chevron reported on Friday lower Q1 earnings compared to a year ago, with profits squeezed by weak refining margins and volatile oil prices and Exxon badly missing on both earnings and revenues.

Both supermajors, however, reported higher upstream production, driven by increased production at the Permian—the key growth region for both companies.

Exxon posted earnings of US$2.4 billion for the first quarter of 2019, or US$0.55 per share assuming dilution—down by 50 percent compared to the first quarter of 2018 and down 61 percent from Q4 2018.

The US$0.55 per share earnings fell well below the analyst estimate of US$0.70 earnings per share by the Wall Street Journal.

Exxon’s upstream liquids production increased by 5 percent compared with the first quarter of 2018, driven by a nearly 140-percent jump in Permian unconventional growth.

However, downstream operations were hit by heavier refinery maintenance and “weak industry fuels margins from high gasoline inventory levels and narrowed North American crude differentials,” said Exxon, whose global downstream operations swung to a loss of US$256 million from a US$940-million profit in Q1 2018.

“Solid operating performance in the first quarter helped mitigate the impact of challenging Downstream and Chemical margin environments,” said Darren W. Woods, chairman and chief executive officer.

Earnings at Chevron also dropped due to weaker oil prices and weak refining and chemicals margins, but Chevron’s profit beat—albeit slightly—analyst estimates.

Chevron reported earnings of US$2.6 billion, or US$1.39 per share, for Q1 2019—down from US$3.6 billion, or US$1.90 per share in the first quarter of 2018—but still above the analyst estimate of US$1.30 per share. 

Chevron’s upstream production volumes increased by 7 percent annually, mostly due to the Permian and Wheatstone in Australia.

“First quarter earnings declined from a year ago, largely due to lower crude oil prices and weaker downstream and chemicals margins,” Chevron’s chairman and CEO Michael Wirth said.

After the release of the results, Exxon’s shares were down 2.85 percent while Chevron was down 1.52 percent at 2:01pm EDT on the NYSE on Friday.

By Tsvetana Paraskova for Oilprice.com

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