Exxon Mobil (XOM) and Chevron (CVX) will report first-quarter earnings Friday as crude oil prices stabilize above $100. Oil stocks rose Thursday, with Exxon and Chevron stock near buy points.
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Oil prices have surged in recent months as the West turns away from Russian supply. And analysts had expected the price of a barrel of oil to skyrocket to $200. But Covid lockdowns in China, the biggest importer of crude oil, have turned off its economic engines for now. As a result, suppliers are better able to meet demand.
West Texas Intermediate crude futures fell as low as $95 a barrel on Monday, and closed just above $105 on Wednesday. Meanwhile, Brent crude fell to around $100 on Monday, but rebounded to about $108 on Wednesday.
One big question for Exxon Mobil and Chevron is whether the oil majors will boost capital spending to take advantage of high prices.
Exxon Mobil Earnings
Estimates: Analysts polled by FactSet expect Exxon earnings to balloon to $2.23 a share vs. 65 cents a year ago. Revenue is seen popping 40% to $82.838 billion.
Results: Check back early Friday.
Oil Stocks: Exxon
Shares rose 3% to 87.20 on the stock market today. XOM stock has a cup-with-handle buy point of 89.90, rebounding from its rising 50-day moving average, according to MarketSmith.
Exxon’s relative strength line is trending higher to near 2019 levels. Its RS Rating is 96 out of a best-possible 99, while its EPS Rating is 74.
Exxon earnings and revenue have surged the last three quarters, as demand for oil outstrips supply.
“Our strategy in a balanced pandemic response that leaned heavily on the balance sheet is paying off,” Exxon CEO Darren Woods said at a recent Investor Day event. “In 2021, we paid back nearly all of the debt we took out in 2020, which has taken our debt-to-capital ratio to the lower end of our 20% to 25% range and net debt back to pre-pandemic levels.”
Exxon also increased its dividend for the 39th consecutive year and resumed its share repurchase program in January. On Nov. 10, Exxon said it was boosting its quarterly dividend 1.1% to 88 cents a share.
Exxon Boosts Resource Estimate
On April 26, Exxon said it hiked its recoverable resource estimate for its Stabroek Block in offshore Guyana to 11-billion oil-equivalent barrels, thanks to three new discoveries at the site. The previous estimate was for 10 billion barrels.
The three discoveries are southeast of the Liza and Payara developments and bring to five the discoveries made by ExxonMobil in Guyana in 2022.
While returning value to investors is a primary goal, Exxon, like other oil companies, is also earmarking funds to develop new business models to address climate change.
Exxon has announced $15 billion in investments in its Low Carbon Solutions business.
Chevron Earnings
Estimates: Analysts expect Chevron earnings to nearly quadruple from a year earlier to $3.41 a share. Revenue is seen jumping almost 60% to $51.14 billion.
Results: Check back early Friday.
Chevron doesn’t have direct exposure in Ukraine and Russia, CEO Michael Wirth pointed out at a recent Investor Day conference.
“The Caspian Pipeline being really the only asset that we have that is in Russia,” he said. “So we don’t produce and sell out of Russia. We really just transit through Russia with our production from Kazakhstan.”
But there are secondary impacts from the Russian war in Ukraine, Wirth added. Shipping rates have gone up, as well as insurance premiums.
Nevertheless, Chevron has increased its dividend 20% since Covid. On Jan. 26, it announced a quarterly dividend of $1.42, a 6% increase.
Oil Stocks: Chevron
Shares was up 3.55% to 161.79 on Thursday, back above the 50-day line. CVX stock has a flat-base buy point of 174.86.
Chevron’s relative strength line has also come down in the last few days, but its RS Rating remains high at 96. The company’s EPS Rating is 74.
Chevron Mulls Sale Of Some Assets
Chevron, which has vast operations in the lucrative Permian Basin, has posted three straight quarters of blockbuster earnings amid soaring demand for oil as economies around the world have reopened as Covid wanes.
However, Chevron is reportedly considering selling some of its assets in the Permian Basin as it slowly pivots to address climate change with new business models.
Reuters reported in September that Chevron is looking to sell its oil and gas assets in the Eagle Ford Basin in south Texas.
A Chevron spokesperson confirmed to Reuters that the company was marketing the assets for sale.
Chevron could rake in $1 billion to $2 billion for the assets, the report said.
The rise in crude oil prices has made sale of such properties lucrative. Oil companies like Chevron could use those proceeds to shore up cash balances, increase dividends and invest in alternative energy.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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Source: https://www.investors.com/news/oil-stocks-exxon-chevron-earnings-crude-oil-prices/?src=A00220&yptr=yahoo