- Exxon Mobil (XOM -5.8%) and Chevron (CVX -3.5%) shares plunge following their Q4 earnings reports (I, II), as cost cuts and rising oil prices failed to offset weakness in international refining operations.
- Especially for XOM, the size of the share price drop is striking, on pace for the biggest decline in seven years; shares are up just 4% over the past six months while crude prices have climbed 34%.
- “It was a pair of disappointing results from both companies,” says Edward Jones oil analyst Brian Youngberg. “Is refining something to be concerned about as we move through 2018? Will that be an offset to those higher oil prices?”
- The XOM and CVX results also were in contrast to big oil rivals ConocoPhillips (NYSE:COP) and Royal Dutch Shell (LON:RDSa) (RDS.A, RDS.B); the latter overtook XOM’s annual cash generation for the first time, producing ~6% more cash last year than XOM’s $33.2B in 2017.
- XOM's total production fell by 130K bbl/day and reported a $1.3B charge on its natural gas properties, the second straight year the company has needed to recognize the declining value of certain prospects.
- “Production declines are a continuing challenge" for XOM, says Youngberg. "They need to jump-start the growth for investors to get excited again.”
- Now read: Exxon Mobil Corporation 2017 Q2 - Results - Earnings Call Slides
Original article