EXXONMOBIL signalled on Tuesday that sharply lower oil refining profits and weakness across all its businesses would reduce its fourth-quarter earnings by about US$1.75 billion from the prior quarter.
The oil major also said in an SEC filing that upstream asset sales would benefit results by about US$400 million, but overall impairments would cost about US$600 million. The company’s filing did not specify a reason for the impairments.
ExxonMobil’s snapshot is closely watched for clues to how other oil majors will fare when they begin releasing results this month.
ExxonMobil is expected to post a profit of US$1.76 a share for the fourth quarter, down from US$2.48 a share, in the same quarter last year, according to financial firm LSEG.
ExxonMobil’s earnings snapshot signaled profits “well below consensus,” said Biraj Borkhataria, an oil analyst with RBC Capital Markets, in a note to investors. The forecast showed “significant headwinds” in refining, he added.
The company indicated oil refining margins would cut earnings by between US$300 million and US$700 million from the third-quarter level. It also signalled timing effects would lop off another US$500 million to $900 million.
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Demand for petrol and diesel has lagged expectations globally and the start of new oil refineries in Asia and Africa led to excess supplies in the market.
US fuel stockpiles grew in the quarter as refiners keep their utilisation rates high and demand was weaker than expected.
Oil prices declined about 6 per cent in the quarter ended Dec 31 from the prior three months, and down nearly 12 per cent from a year-ago, as traders worried about global oil demand.
The drop was partially offset by higher US prices for natural gas, which were up about 30 per cent from the prior quarter.
The industry bellwether had posted US$8.6 billion in earnings for the third quarter, and an adjusted profit of US$9.96 billion in the year-ago fourth quarter.
ExxonMobil also said that lower margins in its chemicals business would lower earnings by about US$400 million compared to the third quarter.
The company will release final results on Jan 31, the filing said. REUTERS
