Exxon down after oil warning, refining hits 4Q profit

(Bloomberg) — Shares of Exxon Mobil Corp. fell after the company warned that its fourth-quarter earnings would be hit by lower crude oil prices and shrinking refining margins in the final three months of 2024.

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Oil prices cut earnings at Exxon’s production division by about $700 million, while refining margins cut its profits by another $500 million compared with the third quarter, Exxon said. in a statement on Tuesday. Natural gas prices were up about $200 million, while chemical margins narrowed.

Shares fell as much as 1.9% to $106.70 in New York. It was the fourth-worst performer on the S&P 500 energy index at 12:08 pm Shell Plc also disclosed a drop in fourth-quarter earnings earlier Wednesday.

Exxon’s update implies fourth-quarter earnings per share will be about 17% below current analyst estimates, Mizuho analyst Nitin Kumar wrote in a note. In particular, Exxon faces “significant headwinds” in its refining division, RBC Capital Markets analyst Biraj Borkhataria wrote. The company has the largest refining footprint among its peers.

“We see this as a negative release and consistent with the revisions seen for independent refiners and other larges with heavy exposure to refining,” Borkhataria said.

Exxon’s guidance doesn’t take into account operating performance or changes in production levels, but it’s a sign that the fourth quarter was tough for Big Oil. Investors are worried about China’s economy amid ample global crude supplies.

Exxon indicated it will report a $400 million gain on fourth-quarter asset sales, along with charges of the same amount.

(Updates with shares in the third paragraph, analyst comments from the fourth).