Exxon Mobil poised to deliver Q2 earnings beat on higher crude prices, increased production

Exxon Mobil Corp (NYSE:XOM, ETR:XONA) is expected to highlight quarter-over-quarter improvements when it files its quarterly earnings considerations 8-K, analysts at UBS believe.The UBS analysts have a ‘Buy’ rating on the stock and a $154 price target, representing upside of about 35% from its current share price of $114.

Ahead of Exxon filing its earnings considerations, expected this week, the analysts wrote in a note to clients they expect the oil and gas giant to report second quarter earnings per share of $2.55, higher than the consensus estimate of $2.40.“This compares to 2.06 in Q1 2024, with the increase mainly driven by the partial quarter of PXD volumes, higher crude oil prices, and higher refinery utilization rates,” they wrote.

For Exxon’s Upstream segment, the analysts forecast income of $6.9 billion, up $1.24 billion quarter-over-quarter on total volumes of 4.29 million barrels of oil equivalent per day (mmboepd), above consensus estimates of 4.18 mmboepd.

“The main driver of the quarter-over-quarter earnings uplift is the 480 mboepd sequential volume increase from 58 days of PXD production in Q2, with the remaining volumes to come in Q3 resulting in about 1.4 mmboepd of Permian production,” they wrote.“Crude oil and international gas prices moved up compared to Q1, supporting earnings expansion within the segment, but will be partially offset by lower US gas prices.”

Energy Products net income is seen increasing to $2.7 billion, up $1.3 billion from Q1 but notably below the fiscal 2023 quarterly average of $3 billion.They added that Q1 saw a $1.06 billion drag to earnings from Math to Marker (MTM) impacts, which should see some reversal this quarter.“Outside of the MTM, the sequential increase is largely driven by lower turnarounds in the quarter and International refinery utilization rates increasing,” they wrote.

“We forecast International utilization rates increasing about 270 basis points sequentially, mainly on normalized European rates, while we expect US utilization rates to be roughly flat quarter-over-quarter. Partially offsetting this is lower refining margins.”

Chemical Products net income is expected to be down $64 million quarter-over-quarter at $721 million, which the analysts see driven primarily by lower chemical margins.They forecast Specialty Products net income of $770 million, flat over the previous quarter, as higher US volumes offset lower International volumes.