Exxon Earnings Will Get a Boost from Higher Oil and Natural Gas Prices. The Stock Is Jumping.
Exxon said surging natural gas prices could boost third-quarter earnings by up to $900 million.
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Exxon Mobil said higher oil and natural-gas prices could boost its third-quarter earnings by up to $1.5 billion, in a filing late Thursday.
Natural-gas prices have surged around the world in recent months as shortages have hit the U.K., Europe and China, partly caused by increasing demand due to the Covid-19 recovery.
U.S. natural-gas prices have climbed more than 130% so far this year, hitting seven-year highs on Thursday. Oil prices have also rallied, with West Texas Intermediate futures up more than 50% year-to-date.
Exxon (ticker: XOM) said it expected changes in natural-gas prices to boost third-quarter earnings by between $500 million and $900 million over the previous quarter, while higher oil prices could increase profit by $200 million to $600 million.
Refining margins should also improve, adding $500 million to $700 million to earnings, Exxon said, but chemical margins could negatively impact third-quarter results by between $200 million and $400 million. Despite the expected boost, Exxon stock was largely unmoved in premarket trading early on Friday, edging 0.4% higher after slipping 1.7% on Thursday. The shares have climbed more than 9% in the past month as energy stocks have enjoyed gain amid the global power crunch.
The crisis shows no signs of abating just yet. European natural gas hit €100 a megawatt-hour late Thursday, before retreating into Friday. That’s a fivefold increase this year. The latest move higher came as a top Chinese government official ordered state-owned companies to secure energy supplies at all costs.
The pressure was eased slightly when Russia said exports by state-owned Gazprom to its major Asian and European markets would grow by more than 10% over last year, exceeding previous forecasts.
Write to Callum Keown at [email protected]
