ExxonMobil (XOM) and Chevron (CVX) reports second-quarter results early Friday morning, with analysts expecting a slightly different performance. The financial reports come amid a drop in oil prices despite heightened tensions in the Middle East. Additionally, the two U.S. supermajors continue to feud over Chevron’s bid to invade oil-rich Guyana, with an arbitration hearing set for May 2025.
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Oil Prices and Energy Stocks: What Investors Need to Know
Analysts’ consensus is for Exxon Mobil’s earnings per share to grow 4% to $2.02. That would be the company’s first profit increase after four quarters of decline. Views sees revenue at $90.09 billion, up about 9% from a year ago — also the first increase in five quarters.
Meanwhile, Chevron predicts that revenue and profit declines will continue. Q2 earnings are expected to fall 5% to $2.93 per share, a fifth consecutive decline. Revenue is expected to fall less than 1% to $48.68 billion, the smallest decline in six quarters.
Exxon and Chevron both saw profit declines in Q1, largely due to weaker refining margins and natural gas prices that fell from last year’s peaks. Both Exxon Mobil and Chevron saw profit and revenue declines in 2023 as oil and natural gas prices fell from last year’s levels, which had been boosted by Russia’s invasion of Ukraine.
Exxon Mobil shares fell 0.7% to 117.71 in morning trading on Thursday. On Wednesday, XOM shares rose 0.4% to 118.59. Chevron shares fell 3.2% to 155.52 in morning trading on Thursday, after rising 0.6% to 160.47 on Wednesday. Shell (SHEL) fell 1.1% early this year after reporting better-than-expected second-quarter results, with earnings per share rising more than 30%.
On Tuesday, BP (BP) reported mixed results for the second quarter, with profits beating expectations and revenues falling short. BP shares fell 1.6% on Thursday.
Exxon Mobil vs. Chevron: Guyana
By the end of 2023, Chevron agreed to the acquisition Hess (HES) for $53 billion, giving the supermajor a stake in the project offshore Guyana. The energy sector is hailing the offshore Guyana resource first discovered by Exxon as the biggest oil discovery in the past 10 years.
Exxon Mobil has a 45 percent interest in Guyana’s Stabroek Block, where wells have been completed and other wells are under development. China’s CNOOC International has a 25 percent interest in the project, while Hess has a 30 percent interest. The Exxon-led venture has drilled wells 18,000 feet deep, with drillships operating in waters as deep as 8,900 feet.
Esso Exploration & Production Guyana Limited, the subsidiary of Exxon Mobil, is the consortium operator. The area offshore Guyana reports estimated recoverable resources of over 11 billion barrels of oil equivalent. Industry projections indicate that Guyana will produce over 1 million barrels per day (bpd) by 2026.
Currently, Hess’ share of net production is about 110,000 bpd. Exxon Mobil produces about 400,000 bpd in Guyana, all from the Stabroek. Exxon expects output to reach 1.2 million bpd by the end of 2027.
By comparison, the Energy Information Administration estimates that the Permian Basin in West Texas and New Mexico will produce about 6.3 million barrels per day in 2024. It is estimated that it contains 50 billion recoverable barrels in the Wolfcamp and Bone Spring formations alone.
Last week, an oil service company TechnipFMC (FTI) reported better-than-expected results, with profits rising 330 percent to 43 cents per share. The company cited expansion in oil-rich Guyana as a reason for its financial performance. TechnipFMC has been awarded subsea production contracts for six offshore projects in Guyana’s oil block.
Exxon Mobil: Right of First Refusal
Guyana, however, has become a bone of contention, with Exxon claiming it has the right of first refusal (ROFR) to acquire Hess’s stake in the Stabroek Block. Exxon Mobil and CNOOC on March 26 consolidated arbitration claims against Chevron’s Hess takeover.
Chevron announced Wednesday that its arbitration hearing with Exxon Mobil is scheduled for May 2025, according to a regulatory filing. The oil giant added that it expects a decision to be made within three months of the hearing.
“Exxon and CNOOC continue to ignore the clear language of the operating agreement, and Chevron and Hess remain confident that the arbitration will confirm that the Stabroek ROFR does not apply to the merger,” the company wrote in the document. Chevron added that it and Hess “remain committed” to the merger.
Earlier this year, Exxon Mobil CEO Darren Woods said Exxon “wants to ensure that the value we have created is not diminished by the actions of third parties.”
“We have filed for arbitration to confirm our rights and determine the value that the Chevron-Hess transaction gives to the Guyana assets,” Woods said in the Q1 earnings call in late April. “This allows us to evaluate options to maximize value for our shareholders. Any responsible management team would do the same.”
Exxon and Chevron: Stock Prices and Oil Prices
XOM shares have been grinding against resistance around 120 since early 2023. Exxon Mobil has a flat base with an official buy point of 123.75, the latest in a series of adjacent bases. The stock is up 19% year-over-year, but is still well below an April high.
Meanwhile, Chevron stock is currently in a saucer and handle pattern with a buy point of 167.11, according to MarketSurge. CVX has risen more than 7% in 2024, hitting a high of 167.11 in April, the base’s current buy point. Chevron stock hit an all-time high of 189.68 in November 2022.
Meanwhile, geopolitical risk in the Middle East has increased in recent days. U.S. West Texas Intermediate (WTI) oil prices rose about 5% this week to over $78 a barrel as concerns about a direct confrontation between Israel and Iran have resurfaced. Futures for Brent crude, the international benchmark, traded above $81 a barrel on Thursday.
US oil prices are down about 0.8% in 2024, with Brent futures down 1.5%.
“WTI continues to trade around $80/bbl, supported by low storage inventories and global supply concerns,” FactSet senior energy analyst Connor McLean wrote on Tuesday. “With global demand expected to increase next year, prices should remain constructive for increased domestic drilling activity in 2025, leading to increases in both crude oil and associated gas production in the U.S.”
Exxon Mobil stock has a Composite Rating of 64 out of a maximum of 99. XOM also has a Relative Strength Rating of 55 and an EPS Rating of 67.
Follow Kit Norton on X @KitNorton For more information.
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