ExxonMobil's profit falls 28% on weaker gas prices and refining margins

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ExxonMobil’s chief financial officer said the US oil major is watching the “pretty troubling” geopolitical events in the Middle East and Russia closely as the company reported first-quarter profits that were below Wall Street expectations.

Kathryn Mikells told the Financial Times Exxon’s operations had not been disrupted by the escalating tensions in the Middle East, including retaliatory strikes between Israel and Iran, but it continues to monitor threats.

“The recent geopolitical events are pretty troubling. It’s a situation that we watch very closely. Obviously, geopolitical events can have an impact on the business,” she said in an interview.

Mikells said Exxon was focused on “ensuring the safety of our people” but stressed that its operations had not really been disrupted.

Exxon benefited from a surge in oil and natural gas prices following Russia’s full-scale invasion of Ukraine in 2022, which enabled it and other oil companies to report record profits. Prices have since moderated but Exxon shares have performed strongly this year, rising 18 per cent to hit a record high above $123 a share earlier this week.

On Friday Exxon reported first quarter net profit of $8.2bn, which was down 28 per cent from $11.4bn on the same period last year due to lower gas prices and oil refining margins. It posted earnings per share of $2.06, below consensus expectations of $2.19, according to FactSet.

Mikells blamed a series of non-cash items mainly linked to tax, inventory and balance sheet adjustments and divestments for the earnings miss. She said Exxon’s business was performing well, noting that cash flow from operating activities of $14.7bn was about $1bn above consensus.

Exxon is embroiled in an arbitration dispute with its US rival Chevron, which is attempting to gain a foothold in the fast-growing Guyana operation by acquiring one of Exxon’s partners, Hess, for $53bn.

Chevron’s proposed deal would hand it control of 30 per cent of the Stabroek Block, one of the largest offshore oil discoveries in decades. Exxon owns 45 per cent of the oil block off Guyana’s coast.

Mikells reiterated Exxon’s belief that it had a pre-emption right to Hess’s Guyana asset. “It’s about confirming our rights . . . and establishing the value associated with the transaction for Guyana,” she said.