Exxon earnings and revenue top expectations

While the collapse in prices is partly attributable to the decision a year ago of Saudi Arabia not to cut production in the face of global oversupply, it is more fundamentally the result of a slowdown in the real economies of the major economic powers, from the USA to Europe, Japan and China, as well as the so-called “emerging market” economies.

Chevron Corp (CVX.N) is slashing 10 percent of its workforce and sharply paring back its budget, with Chief Executive Officer John Watson giving a downbeat view on Friday of an industry beleaguered by low oil prices. Production of oil and natural gas rose 8.1% on the quarter, slightly above analysts’ forecasts. Net profit margin of the company is recorded at 7.40% and its operating profit margin is 7.20%.

Wall Street had expected Exxon to deliver quarterly earnings per share of 89 cents on $63.75 billion in revenue, according to consensus estimates from Thomson Reuters.

Exxon Mobil reported profits of $4.2 billion between July and September, even as crude prices continued to slide in a historic downturn in crude prices these last 12 months.

It expects capital spending of $25 billion to $28 billion in 2016, down 25 per cent from 2015.

Exxon Mobil is facing a cash flow shortfall and lacks near term visibility – when compared against Chevron, Royal Dutch Shell and BP – but the situation isn’t alarming. The company presently has an average rating of “Hold” and an average price target of $85.98. This decline is in fact the greatest 12-month drop in the value of crude oil since 1988. Oil prices rallied in the hours leading up to the 2 p.m. announcement as investors widely expected the Fed to delay a rate hike.

Decades of financial discipline that honed Exxon Mobil into the leanest, most-efficient oil company in the world are paying off as it navigates the worst market slump since the 1980s. This continues to cast a bear’s shadow on energy prices.

True, oil prices have begun to rebound, and any sustained rally in crude would bode well for Exxon’s revenue and earnings.

But how will companies such as Chevron respond? In 2017 and 2018 too, it expects to cut spending further, to around $20 billion to $24 billion.

Yet he said Chevron would “pace” the timeline for the other large LNG projects, in western Canada and Angola. The Texas-based Kanaly Trust Co has invested 16.55% in the stock.

The real question here is what exactly Chevron can do to stop the process, or at the very least slow down its decline. Net income dropped to $2.04 billion from $5.59 billion, squeezing Chevron’s production profits into razor-thin territory.

There’s no escaping the reality of Chevron’s situation. In April 2013, BNK Petroleum (US) Inc. sold Tishomingo Field, Oklahoma assets other than the Caney and upper Sycamore formations to XTO Energy Inc., a subsidiary of Exxon Mobil Corporation. It is slashing costs as it prepares for a long-term low oil price environment.

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