In its recent announcement, Exxon Mobil Corp.XOM, a leading player in the energy sector, projected a reduction in their second-quarter profits. This is primarily a result of the persistent slump in natural-gas prices. The impact on profitability is slated to be induced on its upstream operations–which majorly involve the initial stages of energy production including exploration and extraction of petroleum and natural gas.
Exxon’s Expectations
Exxon spoke of its expectations in terms of the imminent downturn. The dip in natural-gas prices is expected to shave off between $2.2 billion and $1.8 billion from the quarterly results, according to the Exxon officials. This means the financial status of the company’s exploration and production business could be significantly impacted.
Moreover, other factors contributing to the downscaling of profits include scheduled maintenance and lower seasonal gas demand. This specifies that not just the market price, but operational factors are also weighing on the profitability of Exxon’s upstream business.
Profitability Status in Numbers
| Factors | Expected Impact on Profits |
|---|---|
| Lower natural-gas prices | $2.2 billion to $1.8 billion |
| Scheduled Maintenance and Lower Seasonal Gas Demand | Not Quantified |
Exxon has yet to announce the exact date for releasing its detailed second-quarter results. However, industry experts and analysts are anticipating these reports to be published sometime towards the end of July or in early August. Analysts polled by FactSet are placing their estimates for Exxon’s adjusted EPS (Earnings per Share) at around $2.28 a share for the quarter. Sales are anticipated to be somewhere in the tune of $91.1 billion.
Analysts’ Estimates for Q2
- Adjusted earnings per share (EPS): $2.28
- Sales: $91.1 billion
However, these are just preliminary estimates and the actual figures might vary depending on how the company navigates through its challenges. The natural gas sector is a volatile market, heavily influenced by political, economic, and environmental factors. Also, with the global focus shifting towards renewable energy sources, the demand and price of natural gas are continually under pressure. Therefore, the final financial figures could be even less encouraging.
With the anticipated lower results, investors and stakeholders of Exxon Mobil Corp XOM will be keen to understand the underlying cause of this predicament in greater detail. They will be looking to gain a comprehensive overview of the company’s performance, challenges, and future strategies that Exxon plans to implement to strive in these tough times.
Key Points
- Exxon Mobil Corp foresees reduced profits for Q2 chiefly due to falling natural-gas prices.
- Such low natural gas prices could result in a reduction of between $1.8 billion and $2.2 billion in the quarterly results.
- Factors such as scheduled maintenance and lower seasonal gas demand are additional drags on the quarterly profits.
- The Q2 results are expected to be released towards the end of July or in early August.
- Analysts predict Exxon’s adjusted EPS to be $2.28 per share, with sales projected at approximately $91.1 billion.