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Exxon ... posting refining losses

Exxon ... posting refining losses

Refining woes hit Exxon, Chevron

HOUSTON

ExxonMobil Corp and Chevron Corp reported lower profits, citing lower margins and refining weaknesses, areas that have plagued the two oil companies off and on for more than a year.

Exxon posted the first loss in its refining business since 2009, citing the worst refining margins on gasoline and other profits it had seen in a decade. Chevron reported its refining and chemical profits fell 65 per cent.

Both reported top-line figures that missed Wall Street expectations and were lower than year-ago levels due to weaker crude pricing.

Exxon’s 49 per cent drop in first-quarter profit showed the turnaround at the largest US oil producer remains a work in progress.

'It was a tough market environment for us this quarter,' Exxon Senior Vice President Jack Williams said on a call with analysts.

Exxon continued to spend heavily to boost output, with capital spending up 42 per cent over a year ago as it poured new investment into its shale and offshore operations. Investors have been pressing oil companies to cut back on spending and increase returns to shareholders.

Its first-quarter profit fell to $2.35 billion, or 55 cents a share, from $4.65 billion, or $1.09 a share, a year ago. Analysts had expected Exxon to earn 70 cents per share, according to Refinitiv Eikon estimates.

'Clearly, the corner is further away than we expected and we expect this to lead to underperformance in the near term,' analysts at RBC Capital Markets said in a client note.

At Chevron, investors ignored earnings that beat estimates and focused on its $33 billion bid for rival Anadarko Petroleum Corp.

Occidental Petroleum Corp sought to derail Chevron’s offer with a unsolicited, $38 billion bid for Anadarko.

Chevron Chief Executive Michael Wirth told analysts joint integration planning to combine the two companies had begun. He declined to say if it would raise its offer for Anadarko, saying it had a signed agreement with Anadarko.

'We would not be surprised to see Chevron raise its offer,' wrote analysts at Edward Jones in a research note, saying they believed the company’s bid will 'ultimately be the successful one.'

Chevron’s production rose and achieved higher profit from its US shale business, offsetting some of the drop in international oil and gas earnings.




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