Make Kitco Your Homepage

Wall Street cranks up Exxon's outlook on booming natgas prices

Kitco News

HOUSTON, Oct 5 (Reuters) - Wall Street analysts on Wednesday sharply increased their view of Exxon Mobil Corp's third quarter earnings after the company disclosed a $2 billion profit gain from selling natural gas.

The disclosure signaled the largest U.S. oil maker quarterly profit due out later this month will land close to the second quarter's record $17.9 billion profit, analysts said. The earnings revisions follow a securities filing that offered a snapshot of operating profits.

Exxon could earn about $4 per share, compared to the second quarter's $4.21 per share profit, analysts wrote. The consensus was $3.44 per share, according to IBES Refinitiv.

Exxon shares jumped 4% to $99.09 on Wednesday. The previous session they closed up 3.6%.

"Upstream was much stronger than expected, particularly on gas, while refining was worse than we had modeled," said RBC director of European research Biraj Borkhataria.

Exxon's profits from producing oil and gas last quarter "will surpass record 2Q22 earnings with an implied mid-point of $11.8 billion," wrote analysts at Bank of America Securities. The results set up Exxon for its first "meaningful" dividend increase in three years, they added.

Gas prices have soared during the war in Ukraine as Europe scrambles to substitute Russian pipeline gas supplies that used to make up almost 40% of the continent's imports.

The Dutch TTF gas benchmark was trading about $47 per million British thermal units (mmBtu) this week and U.S. gas futures traded Wednesday about $6.90 per mmBtu.

On Tuesday, Exxon said the approximately $2 billion increase in natural gas profits more than offset a quarterly decline of about $1.6 billion in oil profits.

Exxon and rivals this year have posted sky-high earnings on rising energy prices and demand aided by cost-cutting. Its results bode well for companies with sizeable gas businesses, including Chevron Corp , TotalEnergies (TTEF.PA) and ConocoPhillips (COP.N).

Reporting by Sabrina Valle; Editing by David Gregorio
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.