📊 Earnings of 'Big Oil' companies. What did Exxon and Chevron show?

US oil giants Exxon Mobil (XOM.US) and Chevron (CVX.US) reported their financial results for Q4 2023. Overall, the companies' revenue-level results performed mixed. In this aspect, earnings alone (relative to analysts' expectations) fared much better.

Exxon Mobil (XOM.US)

• Earnings per share $2.48 (estimate $2.21)
• Sales revenue: $84.34 billion (estimate: $85.23 billion)

Comments:

• The company plans to start lithium production in 2027 and aims to supply lithium to 1 million electric vehicles per year by 2030
• We forecast lower volumes in Q1 due to the lack of a favourable allowance impact in Q4, partially offset by accelerated development work in the mining segment.
• Q4 free cash flow fell 35% to USD 7.97 billion, but exceeded FactSet consensus of USD 7.77 billion.

Exxon Mobil shares (XOM.US, D1 interval)

The company's shares are currently trading within the support set by the 23.6% Fibo measure of the downward wave initiated in September 2023. Before the Wall Street open, the company's shares are currently losing 0.63%.Source: xStation 

Chevron (CVX.US)

The second-largest oil producer in the US beat expectations for net profit, but revenue disappointed with a 40% year-on-year decline. Shares traded flat after results

• Revenue:$47.18bn vs $51.2bn forecasts
• Upstream: US$1.59bn vs US$4.55bn forecasts
• Downstream: $1.15bn vs $1.03bn forecasts
• Earnings per share (EPS): USD 3.45 vs USD 3.22 forecasts
• Full-year 2023 EPS of US$13.13 vs US$18.83 in 2022 (US$36.54bn)
• The company decided to raise its quarterly dividend by 7.9% to US$1.63 per share, thanks to higher oil and gas production.

Comments: 

• 2023 saw significantly lower refining profits (versus record 2022) and higher costs. Despite delayed expansion and lower y/y profit, Chevron returned an all-time record $26.3bn to investors in 2023 in the form of share buybacks and dividends
• Q4 2023 profits down 18% vs 2022 (to $6.45bn) but company positive on higher production volumes related to oil acquisitions and shale gas production (Permian Basin volumes up 10% y/y although lower prices and f/x impact reduced profits, despite higher production)
• Return on capital employed (ROIC), a measure of business performance, fell to 5.1% in the final quarter of 2023 from 14.2% in Q3 illustrating the seasonal increase in oil and gas prices as a significant factor impacting Chevron's business
• Additionally, production delays and maintenance work at a major oil expansion project in Kazakhstan has led the company to admit that it is not utilising 100% of its potential. Production in Kazakhstan is expected to fall by 50,000 barrels per day this year due to maintenance work.
• Acquisitions and higher investment in the US pushed capital spending up 32% to US$15.8bn.

Chevron shares (CVX.US, D1 interval)

On the daily chart of Chevron shares we see a formation resembling a head and shoulders (RGR), a potential breakout above 157 USD per share could negate the downward scenario that remains underlying in the medium term. On the other hand, a fall below USD 136 could open the stock up to USD 100, a global recession would probably be necessary for this, projecting oil prices. Source: xStation5