October 2, 2019 / 7:04 PM / a month ago

Analysts cut estimates for Exxon's third-quarter profit on weaker oil prices

HOUSTON (Reuters) - Analysts on Wednesday trimmed their profit estimates for Exxon Mobil Corp (XOM.N) after the largest publicly traded oil producer pointed to weaker third-quarter results in a regulatory filing due to weaker oil prices and chemicals margins.

FILE PHOTO: An Exxon sign is seen at a gas station in the Chicago suburb of Norridge, Illinois, U.S., October 27, 2016. REUTERS/Jim Young/File Photo

Exxon’s summary of business changes during the quarter ended Sept. 30 showed it “continues to struggle to generate strong earnings,” analysts at Mizuho Securities USA wrote in a client note.

The company this year began disclosing quarter-to-quarter comparisons of prices, taxes and refining margins to deliver information on its businesses to investors soon after a quarter ends.

The consensus estimate prior to Tuesday’s filing was for profit of 86 cents per share, according to Refinitiv Eikon. But after Exxon signalled weaker oil prices and chemicals margins, several brokerage houses cut their earnings forecasts.

Edward Jones lowered its per share estimate to 65 cents from 85 cents previously. Mizuho also cut its forecast to 65 cents, from $1.04 and slashed its full year projection to $2.86 a share from $3.27. Exxon earned $1.46 a share in the year-earlier third quarter.

Exxon shares were down 2.6% to $67.18 in mid-day trading.

“We expect the company to continue to outspend its cash flow as it invests heavily over the next few years,” said Jennifer Rowland, an equity analyst with Edward Jones.

Exxon’s range of impacts indicate per-share earnings of between 54 and 67 cents, RBC Capital Markets analysts wrote. Margins in the company’s chemicals business “remain extremely weak, driven by trade-war related issues and ample supply,” said RBC analyst Biraj Borkhataria.

JP Morgan left its 65 cents a share estimate unchanged, but noted that the company does not provide insight into unplanned outages in its refining and chemicals units. The quarter’s outages could put “EPS closer to 60 cents at the midpoint,” it wrote.

Exxon earlier this year warned analysts it was spending heavily to replace production, with major investments that include the Permian Basin shale fields in the U.S. and offshore Guyana.

In the second quarter, Exxon reported a 21% drop in quarterly profit, its third period in a row of weaker year-over-year results, as sharply higher oil production was offset by weaker refining and chemicals business.

Reporting by Jennifer Hiller

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