Exxon Mobil Corp. and Chevron Corp. are expected to report lower quarterly earnings per share when compared with last year's first quarter, though their stocks have outperformed smaller companies with both in the midst of aggressive expansion plans in shale oil.
A combination of lower oil prices, weakness in LNG portfolios and lackluster refinery margins could hurt integrated oil companies across the board, analysts said ahead of results announcements on April 26.
"We're not looking for a great first quarter for the group," said Blake Fernandez, senior research analyst with Piper Jaffray & Co.'s Simmons Energy.
Still, shares of both companies have performed well in recent months amid extensive efforts to boost investment in the Permian Basin region of West Texas and New Mexico, where heavy production has driven U.S. crude output to an all-time record of more than 12 million barrels per day.
Shares of Exxon Mobil have rallied about 20% since the start of the year, while Chevron stock has risen roughly 10%.
Exxon Mobil, the world's largest publicly traded oil producer, is expected to earn 69 cents a share, down from $1.09 a year ago. Revenues are expected to come in at $64.8 billion, down 5% from a year ago, according to Refinitiv Eikon estimates.
Chevron is forecast to earn $1.30 a share, down from $1.90 a year ago, even as revenue is expected to rise by 1.7% to $38.4 billion, Refinitiv data shows.
Weakness in the sector's shipping and chemical businesses could weigh on results in coming quarters, as those units "could become more challenging in 2019," J.P. Morgan said in a note on Exxon Mobil this month. The bank has a neutral rating on Exxon Mobil.
Exxon Mobil's fourth-quarter Permian Basin oil and gas output was 300,000 bbl/d; it plans to boost that to more than 1 million bbl/d by 2024, it said last month.
Chevron has bid $33 billion to take over Anadarko Petroleum Corp. to expand its reach. On April 24, rival Occidental Petroleum Corp. bid $38 billion on Anadarko, kicking off the first takeover battle for an oil company in years.
RELATED: Occidental Petroleum Kicks Off Anadarko Bidding War With Chevron
U.S. oil prices are up more than 40% since late last year and refinery margins have improved, which could help position the majors for better results ahead, said Fernandez of Piper Jaffray & Co.'s Simmons Energy.
"If you get some weak results, shares might trade weaker on that day, but I think investors are largely going to be able to brush that off," Fernandez said.
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