Chevron and Exxon Q1 Preview: High Oil Prices Should Support Upstream Performance
Herringbone (NYSE: CLC) and Exxon Mobil (NYSE: XOM) are expected to announce first quarter results results on Friday April 29, before market opening.
Both companies can be expected to post strong upstream earnings for the first quarter, helped by higher oil prices.
A comparison of year-to-date price performance between the two stocks:
Chevron reported mixed fourth-quarter results due to LNG trading, catch-up amortization and writedowns. The company issued a cautious production outlook for 2022, with a 0-3% annual decline, with contract expirations in Indonesia and Thailand driving volumes down 5%.
The consensus estimate for Chevron’s EPS (CVX) is $3.44 (+282.2% YoY) and the consensus revenue estimate is $54.96 billion (+76.9% over a year).
RBC downgraded Chevron with a price target of $165, but largely on its valuation, as the shares have outperformed their peers in recent months. He also highlighted Chevron’s significant “indirect” exposure to Russia, as 10% of the company’s upstream production comes from Kazakhstan and goes through Russia’s recently troubled CPC pipeline.
The Caspian pipeline connecting the Tengiz field in Kazakhstan to world markets and crossing part of Russia is Chevron’s only direct exposure to the Ukrainian conflict. The pipeline delivers more than a million barrels a day, and CEO Mike Wirth said in March he had received no indication the pipeline would be shut down by the dispute.
Morgan Stanley, JP Morgan and BofA also downgraded Chevron’s ratings in March, citing relative outperformance and valuation.
Over the past 2 years, CVX has exceeded EPS estimates 50% of the time and has exceeded revenue estimates 38% of the time.
Over the past 3 months, EPS estimates have seen 13 upward revisions and 1 downward revision. Revenue estimates saw 3 upward revisions and 0 downward revisions.
Meanwhile, RBC upgraded Exxon to buy; he sees geographic and commodity end-market exposure driving relative performance between the two companies this year.
RBC believes Exxon (XOM) will benefit from the improved refining environment. With the largest refining footprint among the majors, and growing, RBC shows Exxon’s downstream segment (XOM) is generating profits 18%/30% above street estimates in 2022/2023.
Continued strength in oil and gas prices should keep Exxon on track to post record earnings. Bloomberg Intelligence analysts expect the company to hit its share buyback target sooner, and could even push the limits, as free cash flow for the quarter looks set to increase by a quarter. year to year. Exxon posted $17.1 billion in operating cash flow versus a fourth-quarter expectation of $13.2 billion.
The consensus for Exxon’s (XOM) EPS estimate is $2.23 (+243.1% YoY) and the consensus revenue estimate is $83.57 billion (+41.3 % over one year).
Over the past 2 years, XOM has exceeded EPS estimates 88% of the time and exceeded revenue estimates 50% of the time.
Over the past 3 months, EPS estimates have seen 14 upward revisions and 0 downward revisions. Revenue estimates saw 3 upward and 1 downward revisions.
The recent withdrawal of the oil giant from Russia and a $4 billion write-down of the Sakhalin-1 project will have a limited impact on its first quarter results. Exxon Mobil’s chief financial officer said its exit from Russia would only affect the company’s profits and oil production by 1-2%.