ExxonMobil (XOM) Forecasts Upstream Earnings of $11 Billion for the Second Quarter – July 4, 2022

ExxonMobil Corporation (XOM Free Report) said higher fuel and crude sales margins could contribute to a record profit for its first-quarter 2022 results.

The integrated energy giant expects its upstream business to generate a maximum of $3.3 billion in incremental revenue in the second sequential quarter. ExxonMobil expects operating profits from oil and gas operations to reach up to $11 billion, the highest for any quarter since 2017.

The company expects high oil and gas prices to boost profits from its production business. It expects second-quarter oil and liquids operating results to reflect an improvement of $1 billion to $1.4 billion from that recorded in the quarter to the end of March 2022. The improvement in natural gas prices are expected to have contributed $1.5 billion to $1.9 billion. to the profits of the company upstream.

ExxonMobil said higher refining margins could lead to a sequential improvement in earnings of $4.4 billion to $4.6 billion in the quarter. Additionally, the value of unsettled derivatives may have contributed between an additional $700 million and $900 million. Margins for the company’s chemicals and specialty units are expected to be flat in the second quarter compared to the first quarter.

Although Russia’s invasion of Ukraine has pushed commodity prices up significantly, ExxonMobil expects the loss of Russian production to impact second quarter earnings by 100 to 200 millions of dollars. According to the latest filing, ExxonMobil implied a contribution of $200 million to $400 million from asset disposals in the second quarter.

Improving fuel demand and soaring commodity prices likely helped energy companies in the second quarter. According to Zacks Earnings Trends, the energy sector is on track to generate $51.8 billion in earnings in the second quarter of this year, suggesting an improvement from the $17.9 billion recorded in the quarter. of the previous year.

Company profile and price performance

Based in Irving, Texas, ExxonMobil is one of the world’s leading integrated energy companies.

ExxonMobil shares have outperformed the industry over the past six months. The stock gained 34% against industry growth of 17.7%.

Image source: Zacks Investment Research

Zacks ranking and key picks

ExxonMobil currently carries a Zack Rank #3 (Hold).

Investors interested in the energy sector could look to the following companies that currently have a Zacks #1 (strong buy) ranking. You can see the full list of today’s Zacks #1 Rank stocks here.

Matador Resource Company (MTDR Free Report) is a leading unconventional oil and gas explorer in the United States. MTDR has hedging arrangements in place for oil and gas production in 2022 which will help it weather any low price environment.

Matador recently announced a quarterly cash dividend of 10 cents per share, which doubled from the previous cash dividend of 5 cents initiated last year. MTDR has witnessed upward revisions to earnings estimates for 2022 and 2023 over the past 60 days.

Imperial Oil Limited (IMO Free Report) is one of the largest integrated oil companies in Canada. IMO’s debt to capitalization ratio of 18.9% is quite conservative compared to 32.1% for the sub-sector to which it belongs.

Imperial remains firmly committed to returning money to investors in the form of dividends. The company’s board of directors has approved an increase in the quarterly dividend payment. The new payout of 34 Canadian cents is 26% higher than the previous dividend. In addition, Imperial Oil has revised its current share buyback policy to purchase up to 4% of outstanding common shares.

Range Resource Company (CRR Free Report) is among the top 10 producers of natural gas in the United States. RRC expects free cash flow to exceed $1.4 billion this year, which could be the highest among Appalachian players.

Range Resources has reinstated its regular quarterly cash dividend, which is expected to begin in the second half of this year. RRC forecast its annual dividend rate at 32 cents per share. RRC’s board has approved a $500 million share buyback program, which will likely be funded by its free cash flow generation.

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