EARNINGS PREVIEW: US oil majors benefit from high prices in Q1


TAKING THE PULSE: First-quarter profits of US integrated oil companies are expected to rise year-over-year mainly thanks to higher Brent crude prices, which traded at more than $118/bbl during the quarter, or about 12% higher than the same period a year earlier.

ExxonMobil, however, is likely to be the exception, as the world's largest publicly traded oil company is expected to report lower profits due to its large exposure to low natural gas prices, which during the first quarter tumbled 40.5% to $2.50 per million BTUs compared with a year earlier.

US oil majors' quarterly results are expected to benefit also from a rebound in refining and marketing profits, which are expected to see a boost from a year earlier thanks to improved refining margins.

"Two factors are going to boost oil majors' earnings: higher crude prices and improved refining margins," says Alan Good, an analyst with Morningstar. "In Exxon's case, its unwavering focus on natural gas is going to hold it back."


ConocoPhillips - reports Monday, April 23

Wall Street Expectations: Analysts expect the Houston company to report earnings of $2.08/share on revenue of $53.60 billion for the first quarter. Last year's first quarter, ConocoPhillips earned $1.82/share on revenue of $56.53 billion.

Key Issues: The Houston-based oil giant is set to provide its last earnings report as an integrated oil company. The spinoff of its refining business into a company called Phillips 66 will become effective May 1. The company said earlier this month its preliminary first-quarter average production was about 1.62 million bpd of oil equivalent, in line with expectations, and that its refining operations could be affected by weaker profit margins.

Analysts are likely to ask for a confirmation that Delta Air Lines Inc is interested in buying Conoco's refinery in Trainer, Pa. Analysts are also likely to ask about the status of the company's asset sale program and its share-buyback plan.

- reports Thursday, April 26

Wall Street Expectations: Analysts forecast the oil giant will report earnings of $2.07/share on revenue of $127.10 billion for the first quarter, compared with earnings of $2.14/share on revenue of $114 billion during the equivalent period of 2011.

Key Issues: Executives from the Irving, Texas company are likely to hear questions about what steps the company is planning to take in order to reduce its exposure to low natural gas prices. Analysts could be interested in knowing whether the company plans to increase the number of rigs drilling for oil and natural-gas liquids in the US.

Analysts are also likely to ask for details about Exxon's recent acquisition of some of Chesapeake Energy assets in Oklahoma's Woodford Shale. Analysts would also want to know more about the company's dividend increase, expected next week. The company hinted in March it was likely to offer a higher-than-average dividend boost.

Chevron - reports Friday, April 27

Wall Street Expectations: Analysts expect the San Ramon, Calif. company to report earnings of $3.21/share on $72.42 billion in revenue, compared with earnings of $3.09/share on $60.34 billion in revenue a year earlier.

Key Issues: The second-largest US oil company by market capitalization behind ExxonMobil said this month it expects first-quarter earnings to improve from the prior quarter, driven by higher oil prices and stronger refining results. But it also said daily oil and gas production for the first two months of the quarter was lower than a year earlier, which prompted analysts at UBS to slightly lower first-quarter profit estimates.

Analysts could ask for an update on the legal dispute the company faces in Brazil related with two different recent offshore spills. The company has said the lawsuits have no merit. Analysts are also likely to ask about possible cost increases at the company's massive liquefied natural gas (LNG) projects Gorgon and Wheatstone in Australia.

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