Exxon signals Q2 below market consensus, excluding Pioneer buy

By Sabrina Valle and Tanay Dhumal

HOUSTON (Reuters) - Exxon Mobil Corp on Monday signaled that lower refining margins across the industry and lower natural gas prices will reduce profits in the second quarter.

A snapshot of operating factors affecting the quarter suggests earnings per share between $1.50 and $2.40, or about $8.3 billion, which is 17% below market consensus.

The preview excludes additional oil and gas production from its $60 billion acquisition of Pioneer Natural Resources, concluded on May 3.

But Exxon has provided some indication on how the Pioneer deal will affect results, which includes capital spending running at about $4.8 billion on an annualized basis.

The oil major anticipated that Pioneer would add between 500,000 and 550,000 barrels of oil equivalent per day to its second quarter production, compared with the first three months of the year.

Full financial results, which includes other factors other than operational resuts, are due on Aug. 2.

The largest U.S. oil producer indicated operational results from oil and gas - its main business - will increase due to higher oil prices and despite of lower natural gas prices to about $6.2 billion from $4.6 billion in the second quarter last year, according to a securities filing.

Exxon also said lower refining margins would have a negative impact on second-quarter profit of between $1.1 billion and $1.5 billion compared with the prior quarter.

PIONEER

Exxon has more than doubled its production to 1.3 million barrels of oil equivalent per day (boepd) since concluding the acquisition of Pioneer, up from 620,000 boepd in 2023. The full effects of the merger will be felt in the third quarter.

The company has said it plans to triple Permian production to 2 million boepd by 2027 by drilling horizontal wells that are closer to each other than the industry average, in a cube format, in order to extract more oil and gas from the rocks.

Results also reflect record oil production in Guyana, where Exxon pumped 632,000 boepd with partners in May, reaching a daily record of 663,000 boepd. This is about 100,000 boepd above the initial planned capacity.

Exxon shares were down less than 1%. Its shares have risen more than 13% this year, below the S&P 500's 16% increase, but ahead of other major Western oil rivals.

The company has announced it will increase share buybacks to a $20 billion run rate following the closure of the acquisition. It had projected a 40,000 boepd negative production impact in the quarter due to scheduled maintenance and $3 billion in seasonal cash tax payments.

(Reporting by Sabrina Valle, Editing by Franklin Paul and Tomasz Janowski)