By Sabrina Valle
HOUSTON (Reuters) – U.S. and European oil companies reported weaker first-quarter results on Friday due to a sharp drop in prices from a year ago.
Results at oil and gas companies are still lagging behind 2022’s record levels, which were boosted by a surge in demand following the COVID-19 pandemic and as prices rose after Russia invaded Ukraine.
In the U.S, ExxonMobil (NYSE:) missed Wall Street’s earnings targets in fuel derivatives and Chevron (NYSE:) exceeded tempered expectations with better-than-expected US oil production.
French oil giant TotalEnergies (EPA:) also slightly exceeded analyst expectations as good refining margins partially offset a sharp decline in natural gas profits.
“European gas prices fell by 35%, due to a mild winter and high storage levels,” said Jean-Pierre Sbraire, Chief Financial Officer of TotalEnergies.
Exxon’s profits fell 28%, Chevron fell 16% and TotalEnergies fell 22% year-on-year, with the two US oil giants also taking a toll on weaker gasoline and fuels profits.
Henry Hub futures, the benchmark for U.S. gas, traded below $1.70 per million British thermal unit (mmBtu) and fell to a 3.5-year low earlier this year due to warm weather and oversupply.
Global benchmark prices were largely flat in the quarter from a year ago at $81.76 per barrel.
But higher oil prices – currently trading around $90 – mean lucrative oil refining margins will fall from early this year, with TotalEnergies expecting its refining operations to be less profitable in the second quarter and beyond due to geopolitical tensions and OPEC+ production cuts.
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Last year’s strong profits prompted Exxon, Chevron and Occidental Petroleum (NYSE:) to bid for rivals in hopes of generating higher oil and gas production.
Exxon posted a profit of $8.5 billion, its second-highest first-quarter profit in more than a decade, while Chevron earned $5.5 billion and TotalEnergies $5.1 billion in adjusted net income.
Stock prices reflected the earnings declines, with Exxon down 2.6% and Chevron down less than 1% in late New York trading. Shares of TotalEnergies closed 2.09% higher in Paris after it reconfirmed a $2 billion share buyback.
Executives gave no new guidance on conference calls on their production prospects for the coming quarters, giving investors less reason to cheer.
The prospects of the two largest U.S. oil companies depend in part on the approval of two bidding agreements.
Exxon wants to purchase Natural resources pioneer (NYSE:) in the current quarter, it said.
Chevron said its bid for Hess (NYSE:) will proceed. The deal is expected to be put to a shareholder vote in late May, and an arbitration process with Exxon blocking the sale should be completed in the fourth quarter.
