Foreign exchange cut earnings by $319 million in the latest quarter and boosted them by $580 million a year ago.
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“This company is very refining- and chemicals-centric and those sectors do not benefit from an oil price recovery”, he said in a telephone interview. Prices for June delivery of the USA benchmark finished at $45.92 on Friday. Refining, or downstream, earnings sank 46% to $906 million on weaker margins.
“We’re headed in the right direction”, he said. Total in particular hinted that they may be looking at improvement as the…
Not every company followed the trend.
Exxon Mobil Corporation (XOM) reported quarterly earnings results on Friday, Apr-29-2016. The oil major responded by raising its quarterly dividend Wednesday to 75 cents from 73 cents as the company continues to appease investors. US production rose by 28,000 barrels a day to 500,000 barrels.
“The market is already looking past these results since oil is up nearly 80% from earlier lows”, said Brian Youngberg, an energy analyst with Edward Jones. Better than many predictions, but not-surprisingly down from a year ago.
The company Friday reported net income of $1.8 billion, or 43 cents per share, compared with $4.9 billion, or $1.17 per share, in the same period past year. Analysts had forecast revenue declining to $48.14 billion. Wall Street is relieved that Exxon is still profitable, thanks largely due to its diversified business model that includes refining operations. Those units have been critical in the past 18 months in helping the companies weather the storm of falling prices. Total net loss for the quarter totaled $76 million, down from a net profit of almost $3 billion in the first quarter of 2015.
While the cost-slashing has helped energy companies protect their balance sheets, it has had a devastating impact on another part of the industry – the oil-field services providers that do the gritty work of drilling and pumping. “Also it loses some of its luster as the de-facto defensive company for investors to own”, as Exxon’s strong balance sheet has been a reason behind the stock’s premium multiples.
In its announcement, S&P said that it expects Exxon’s “credit measures, including free operating cash flow (FOCF) to debt and discretionary cash flow (DCF) to debt, will remain below [its] expectations for the “AAA” rating through 2018″.
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“This is the toughest environment we have seen for 30 years, and it is likely to get even tougher before the market returns”, Mr. Kibsgaard said.
