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.

US majors ExxonMobil Corp. and Chevron Corp. recorded their second-largest annual profits in 10 years as oil and natural gas production increased and Chevron shipped record LNG cargoes from Australia even amid work stoppages.

Chesapeake Energy Corp. said it would purchase smaller market rival Southwestern Energy Co. for $7.4 billion in an all-stock transaction creating a $24Bln company that will be the nation’s largest natural gas producer.

Chesapeake Energy Corp. and Southwestern Energy Co., two companies that helped enable the start of US liquefied natural gas exports by providing low-priced feed-gas, are reported to be on the verge of a merger deal as early as this week to create a $16.7 billion company that would be the nation’s largest natural gas producer.

Occidental Petroleum, the Houston-based company with US oil and gas assets and Warren Buffett as a main shareholder as well as owning oil and natural gas stakes in Algeria, Oman and the United Arab Emirates, has agreed to buy US Permian Basin-focused energy producer CrownRock in a cash and stock deal valued at $12 billion including debt.

ExxonMobil Corp. has told investors about the latest schedules for its various liquefied natural gas projects worldwide including a delay in the “mechanical completion” of the Golden Pass LNG export plant on the Gulf Coast and with progress promised in 2024 on Mozambique LNG and on the expansion joint venture in Papua New Guinea.

Saudi Arabia, which is buying LNG assets for the first time through Saudi Aramco, said that recent multi-billion dollar agreed acquisitions during October by US oil majors ExxonMobil Corp. and Chevron Corp. for Pioneer Natural Resources and Hess Corp. respectively for combined sums of more than $112 billion in stock proved that hydrocarbons were “here to stay” in the global energy future.

“Exxon and Chevron didn't buy because they want to have stranded assets,” said Saudi Energy Minister Prince Abdulaziz bin Salman at Riyadh's annual Future Investment Initiative (FII) conference and added that the US combinations for oil and gas could not have come at a “better time” for the industry.

The US takeover deals have drawn criticism from environmentalist activists who regard the merger and acquisition activities as undermining ambitious climate change aims that are increasingly costly and are beginning to affect energy security requirements of nations.

Aramco LNG

Saudi Aramco, the world’s largest oil production group, has signed definitive agreements to acquire a strategic minority stake in a company called MidOcean, a unit of Washington DC-based equity fund EIG for $500 million and thus entering the LNG sector initially in Australia.

Prince Abdulaziz said in the Riyadh's speech that the energy transition would require hydrocarbons including petrochemicals which are vital for sectors such as pharmaceuticals and industry manufacturing.

The International Energy Agency (IEA) argued in its World Energy Outlook issued on October 24 that world fossil fuel demand was set to peak by 2030 as more electric cars were being purchased and China's economy was forced to grow more slowly amid changes centred on renewable energy.

The IEA's forecasts run counter to those of the Organization of the Petroleum Exporting Countries (OPEC), which sees oil demand rising long after 2030 and which would require trillions in new oil sector investment.

Saudi Arabia is the world's biggest oil exporter and intends to increase its oil production capacity by 1 million barrels per day to 13 million barrels per day by 2027 to meet increasing global demand.

Future oil demand

“We are investing not to create a stranded asset. Saudi Arabia would not be investing in raising its capacity if there was not sufficient demand for additional production,” he added.

Analysts noted that the US takeovers by ExxonMobil and Chevron have also focused on US shale oil and natural gas assets and have re-evaluated them upwards.

The Chevron and ExxonMobil deals have increased portfolio assets in premier US shale basins like the Bakken in North Dakota and the Permian in Texas

Other assets that will be acquired when the deals are approved include oil and gas blocks in South America and the Gulf of Mexico.

Hess’s Bakken assets added another leading US shale position to Chevron’s DJ basin and Permian basin operations and will further strengthen US domestic energy security.

In ExxonMobil’s case it agreed to pay an 18 percent premium for Pioneer’s prized assets relative to its share price.

The acquisition of Permian acreage by ExxonMobil provides shale oil, natural gas and liquids for the global and US markets as well as growing LNG feed-gas volumes from associated gas.

ExxonMobil Corp., the largest US oil company and leading LNG producer as a partner of Qatar, agreed to acquire Texas-based Pioneer Natural Resources for $59.5 billion and with an enterprise value of $64.5Bln in the largest acquisition since the historic tie-up between Exxon and Mobil in 1999.

ExxonMobil Corp., the largest US oil company and leading LNG producer and a partner of Qatar, continues in talks to acquire Texas-based Pioneer Natural Resources in what would be its largest acquisition since the historic tie-up between Exxon and Mobil in 1999.