LNG

ExxonMobil Corp. and Chevron Corp. reported first-quarter declines in profits and revenues on lower natural gas prices while both are advancing with their major takeover transactions amid a pre-emption dispute over key assets in the new South American oil and gas hub of Guyana.

ExxonMobil Corp., the largest US oil company and leading LNG producer and a partner of Qatar in many global projects, will have its first-quarter 2024 earnings impacted by price shifts while also completing the sale of its stake in the Adriatic LNG import terminal offshore Italy and pursuing the huge takeover of Pioneer Natural Resources in the US.

ExxonMobil estimated that large decreases in oil, gas and fuel prices would deliver a first-quarter operating profit of between $6.65 billion and $11.6Bln for the first three months of the year compared with $7.63Bln in the fourth quarter of 2023.

ExxonMobil filed its first-quarter earnings indicator with the US Securities and Exchange Commission.

The ExxonMobil earnings total would be well below the prior-year first quarter when natural gas prices were much higher.

Weaker prices

Overall weaker oil and gas prices alone were expected to reduce ExxonMobil’s profits by about $600 million compared with the fourth quarter of 2023.

The company also said fuel derivatives adversely affected gains in gasoline and diesel margins, costing it about $1.1Bln compared with the fourth quarter.

Refining maintenance costs also increased during the fourth-quarter and the first quarter of the 2024.

“To give perspective regarding market and planned factors affecting 1Q 2024 results, we are providing the summary of items management believes will impact 1Q 2024 results relative to 4Q 2023 results,” said the company.

“These factors are generally limited to significant planned activities, market dynamics and seasonal demand patterns,” the filing explained.

“This is only intended to provide information regarding current estimates of these factors,” said the filing.

“It is not comprehensive of all changes between 4Q 2023 and 1Q 2024 results and is not an estimate of 1Q 2024 earnings for the Corporation,” ExxonMobil stated.

Adriatic LNG sale

Dutch energy storage group VTTI has also acquired the 70 percent stake previously held by ExxonMobil in Italy's biggest LNG terminal, the gravity-based structure facility Adriatic LNG, and the balance of 30 percent is now owned by Italian gas grid and terminals operator SNAM.

ExxonMobil had stated in March 2023 that it was considering selling its stake of just over 70 percent in Adriatic LNG as a non-core asset.

The Adriatic terminal is located 15 kilometres (9.3 miles) off the Veneto coastline of Italy and has been on line since 2009.

It includes two LNG storage tanks, each with a capacity of 125,000 cubic metres.

The operating company is called Terminale GNL Adriatico. ExxonMobil had held its majority stake while a QatarEnergy unit, Qatar Terminal Company, owned 22 percent and SNAM had held 7.3 percent.

ExxonMobil is also pursuing the all-stock deal to acquire Texas-based Pioneer Natural Resources for $59.5Bln.

The combination gives ExxonMobil a stronger position in the Permian Basin in Western Texas and New Mexico.

ExxonMobil is expected to report first-quarter earnings on April 26.

ExxonMobil Corp.,  the largest US oil company and leading LNG producer and a partner of Qatar, will have its third-quarter earnings impacted by price shifts as it also found a buyer for its stake in the Adriatic LNG import terminal offshore the northeast coast of Italy.

ExxonMobil said upstream earnings potential was expected to double by 2027 from three years ago with more than 70 percent of capital investments being deployed in strategic developments in LNG projects around the world and in the US Permian Basin as well as in the South American nations of Guyana and Brazil.

The Irving, Texas-based major said that by 2027, upstream production is expected to grow by 500,000 oil-equivalent barrels per day to 4.2 million oil-equivalent barrels per day with more than 50 percent of the total to come from these key growth areas.

“Around 90 percent of upstream investments that bring on new oil and flowing gas production are expected to have returns greater than 10 percent at prices less than or equal to $35 per barrel, while also reducing upstream operated greenhouse-gas emissions intensity by 40-50 percent through 2030, compared to 2016 levels,” said ExxonMobil.

Corporate plan

The details came in ExxonMobil’s just issued corporate plan for the next five years, with a sizeable increase in investments aimed at emission reductions.

ExxonMobil’s priority LNG production areas are at the Golden Pass project in Texas, in the southeast African nation of Mozambique, in Papua New Guinea and in Qatar where its main partner is QatarEnergy.

The corporate plan through 2027 maintains annual capital expenditures at $20 billion to $25 billion, while growing lower-emissions investments to about $17Bln.

ExxonMobil forecast that earnings and cash flow growth was expected to double by 2027 compared with 2019.

There would also be share-repurchase program expanded up to $50Bln through 2024, including $15Bln in 2022.

“Our five-year plan is expected to drive leading business outcomes and is a continuation of the path that has delivered industry-leading results in 2022,” said Darren Woods, Chairman and Chief Executive.

“We view our success as an ‘and’ equation, one in which we can produce the energy and products society needs - and - be a leader in reducing greenhouse-gas emissions from our own operations and also those from other companies,” added Woods.

The corporate plan we’re laying out today reflects that view, and the results we’ve seen to date demonstrate that we’re on the right course.”

The company also remained on track to deliver a total of about $9 billion in structural cost reductions by year-end 2023 versus 2019.

In the Permian, the company said it was on track with its goal to reach net-zero Scope 1 and 2 emissions from its operated unconventional assets by 2030.

“We’re aggressively working to reduce greenhouse gas emissions from our operations, and our 2030 emission-reduction plans are on track to achieve a 40-50 percent reduction in upstream greenhouse-gas intensity, compared to 2016 levels,” added Woods.

“We will continue to advocate for clear and consistent government policies that accelerate progress to a lower-emissions future. At the same time, we’ll continue to work to provide solutions that can help customers in other industries reduce their emissions, especially in higher-emitting sectors of the economy like manufacturing, transportation and power generation,” stated the CEO.

ExxonMobil Corp. posted first-quarter 2022 earnings of $5.58 billion compared with $2.73Bln in the prior-year quarter and $8.87Bln in the previous three months with a $3.4Bln hit taken on exiting Sakhalin-1 oil in the Russian Far East amid progress on Mozambican LNG and Permian Basin activities.

Oil-equivalent production was 3.7 million barrels per day, down 4 percent from the fourth quarter of 2021 due to weather-related unscheduled downtime, planned maintenance, lower entitlements associated with higher prices and divestments.

“The quarter illustrated the strength of our underlying business and significant progress in further developing our competitively advantaged production portfolio,” said Darren Woods, Chairman and Chief Executive.

“Earnings increased modestly, as strong margin improvement and underlying growth was offset by weather and timing impacts. The absence of these temporary impacts in March provides strong, positive momentum for the second quarter,” stated Woods.

Average realizations for crude oil increased 28 percent while first-quarter 2022 downstream earnings were $300 million compared with $1.5Bln in the fourth-quarter 2021.

“Improved industry fuels refining margins and lower expenses were partially offset by lower basestock margins and lower volumes, driven by higher turnaround activity,” said the Irving, Texas-based major.

Permian output

Production in the Permian Basin reached 560,000 barrels per day at the end of the quarter.

“The company remains on track to deliver a production increase of 25 percent this year versus full-year 2021 and to eliminate routine flaring by year-end,” added ExxonMobil.

CEO Woods later discussed the earnings in a conference call with analysts.

“Looking forward, we're also growing our globally diverse portfolio of low-cost, capital-efficient LNG developments,” explained Woods.

“In Mozambique, the 3.4 million ton per year Coral South floating LNG production vessel is being commissioned after arriving on site in January,” he added.

“Coral South is on budget with the first LNG cargo expected in the fourth quarter,” said Woods.

The CEO also explained that the company was making “outstanding progress” on its high-value growth developments in Guyana in South America, in the Permian and in LNG projects.

“Our new Corpus Christi chemical complex is up and running ahead of schedule and generated positive earnings and cash flow in its first quarter of operations,” added Woods.

“In a broad comment on the LNG business, we're seeing across each of our sectors, the pandemic had a pretty profound effect with respect to deferring, delaying capital spend, and, therefore, additional capacity coming on. And as the pandemic has subsided and demand has recovered, we're seeing very tight markets,” explained Woods.

“And then with the Ukraine and the situation there, that has added a significant additional level of uncertainty around supply,” he said.

Dynamic LNG

Woods said the LNG market was currently “very dynamic” and a very high-priced market.

“There is basically very full capacity utilization all around the world, maximizing the amount of LNG moving,” he said.

“Obviously, we've got our Coral LNG starting up later this year, which will help contribute and ease some of that tightness. And then there is Golden Pass,’ added Wood.

“This is an important leg of our strategy of making sure that we have access to LNG supplies that we can supply demand all around the world,” stated the CEO.

“And that's a very important part of our strategy in LNG going forward, is making sure that we've got barrels that we can then move and trade in the marketplace and move across the different regional demand centers. And so I think we're going to continue to look for opportunities in LNG,” declared Woods.

The CEO pointed to opportunities in Papua New Guinea LNG that the company was progressing.

“Obviously, additional investments in Mozambique are in the future as well. And so I think it'll be a very important foundational layer of supply and a really important part of our overall business offering,” he concluded.

The Saudi Arabian Oil Co (Saudi Aramco), the biggest crude oil production company and partly responsible for swamping the globe with oil supplies amid a demand plunge, reported a 25 percent drop in first-quarter net income to $16.7 billion from $22.21Bln in the prior-year quarter.