Will ExxonMobil's (XOM) Upstream Business Aid Q4 Earnings?

2 Feb 2024

Yahoo Finance

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Will ExxonMobils XOM Upstream Business Aid Q4 Earnings

Since ExxonMobil (XOM) has significant exposure to the upstream business, the favorable oil and gas prices are likely to have aided Q4 earnings.

Exxon Mobil Corporation XOM is set to release fourth-quarter 2023 results on Feb 2, before the opening bell. Since the integrated energy player has significant exposure to upstream business, the favorable oil and natural gas prices are likely to have aided the quarterly performance.

Upstream Business

ExxonMobil’s upstream businesses fall under core operations. This segment covers the company’s activities in exploring and developing oil and natural gas resources. From upstream operations within and outside the United States, the energy giant reported earnings of $6.1 billion, excluding identified items, in the third quarter of 2023.

Upstream Q3 Performance

Non-U.S. Operation: In third-quarter 2023, ExxonMobil reported earnings of $4.6 billion, excluding identified items, from upstream activities outside the United States. This marked a decline from the year-earlier figure of $8.7 billion.

U.S Operation: From domestic operations, ExxonMobil reported a profit of $1.6 billion, down from $3.1 billion in a year-ago quarter.

Q4 Oil & Gas Price

Per data provided by the U.S. Energy Information Administration, the average spot West Texas Intermediate crude prices per barrel in October, November and December were $85.64, $77.69 and $71.90, respectively. Although the prices were not as high as in the year-ago quarter, the commodity prices, since higher than the $70 per barrel mark, were thus impressive and healthy.

Natural gas prices in the December quarter were healthier than in the third quarter, aiding the exploration and production activities of XOM.

Gas Price to Support Q4 Upstream Profit

ExxonMobil, in its recent SEC filing, expressed optimism over higher natural gas prices aiding its fourth-quarter earnings but expects lower oil prices to offset the positive. It expects its upstream business’ earnings in the fourth quarter to be supported by $0.4-$0.8 billion sequentially, thanks to increased gas prices, but get hurt by $0.8-$0.4 billion owing to lower liquid prices.

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Earnings Beat

Favorable oil and gas prices are likely to have backed ExxonMobil’s earnings in the December quarter of 2023.

ExxonMobil, carrying a Zacks Rank #3 (Hold), has an Earnings ESP of +0.47%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Our proven model predicts an earnings beat for ExxonMobil this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the chances of an earnings beat, which is the case here.

Other Stocks to Consider

Here are some other firms worth considering, as these, too, have the right combination of elements to beat on earnings in the upcoming quarterly reports:

Western Midstream Partners LP WES currently has an Earnings ESP of +6.96% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The partnership is scheduled to release fourth-quarter earnings on Feb 21. The Zacks Consensus Estimate for WES’s earnings is pegged at 78 cents per share, suggesting a decline from the year-ago figure.

Williams WMB has an Earnings ESP of +1.82% and is currently a Zacks #3 Ranked player.

The company is scheduled to release fourth-quarter results on Feb 14.

Murphy USA Inc. MUSA has an Earnings ESP of +10.67% and is a Zacks #3 Ranked player at present.

Murphy USA is scheduled to release fourth-quarter results on Feb 7. The Zacks Consensus Estimate for MUSA’s earnings is pegged at $5.97 per share, suggesting a year-over-year improvement of almost 15%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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