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ExxonMobil profit declines in Q1 as natural gas prices fall

The Spring, Texas-based company's revenue totaled $83.08 billion, down from $86.56 billion a year earlier. Photo via exxonmobil.com

ExxonMobil's profit declined in its first quarter as natural gas prices fell and industry refining margins dropped.

The energy company earned $8.22 billion, or $2.06 per share, for the three months ended March 31. A year earlier it earned $11.43 billion, or $2.79 per share.

The results didn't meet Wall Street expectations, but Exxon does not adjust its reported results based on one-time events such as assets sales. Analysts polled by Zacks Investment Research were expecting earnings of $2.19 per share.

Shares declined slightly before the market open on Friday.

The Spring, Texas-based company's revenue totaled $83.08 billion, down from $86.56 billion a year earlier. Wall Street forecast revenue of $86.6 billion.

Production in Guyana reached more than 600,000 oil-equivalent barrels per day, a higher-than-expected level, the company said.

Exxon went on a bit of a shopping spree last year when oil prices were surging.

In July, the company said it would pay $4.9 billion for Denbury Resources, an oil and gas producer that has entered the business of capturing and storing carbon and stands to benefit from changes in U.S. climate policy.

In October Exxon topped that deal by announcing that it would buy shale operator Pioneer Natural Resources for $60 billion. Two months later, the Federal Trade Commission, which enforces federal antitrust law, asked for additional information from the companies about the proposed deal. The request is a step the agency takes when reviewing whether a merger could be anticompetitive under U.S. law. Pioneer disclosed the request in a filing in January.

Elevated levels of cash for all big producers drove a massive consolidation in the energy sector. In October Chevron said it would buy Hess Corp. for $53 billion.

Oil markets are being stretched by cutbacks in oil production from Saudi Arabia and Russia, and the war between Israel and Hamas still potentially runs the risk of igniting a broader conflict in the Middle East. While attacks on Israel do not disrupt global oil supply, according to an analysis by the U.S Energy Information Administration, “they raise the potential for oil supply disruptions and higher oil prices.”

Elsewhere in the sector, Chevron Corp. reported a first-quarter profit of $5.5 billion, or $2.97 per share. Its adjusted profit was $2.93 per share.

The results surpassed Wall Street expectations, but Chevron also does not adjust its reported results based on one-time events such as asset sales. Analysts surveyed by Zacks predicted earnings of $2.84 per share.

The oil company posted revenue of $48.72 billion, which fell short of Wall Street's estimate of $49.94 billion.

Chevron's stock dipped in premarket trading.

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A View From HETI

Here's 1PoinFive's newest customer on its Texas CCUS project. Photo via 1pointfive.com

Occidental Petroleum’s Houston-based carbon capture, utilization and, sequestration (CCUS) subsidiary, 1PointFive, has inked a six-year deal to sell 500,000 metric tons of carbon dioxide removal credits to software giant Microsoft.

In a news release, 1Point5 says this agreement represents the largest-ever single purchase of carbon credits enabled by direct air capture (DAC). DAC technology pulls CO2 from the air at any location, not just where carbon dioxide is emitted.

Under the agreement, the carbon dioxide that underlies the credits will be stored in a below-the-surface saline aquifer and won’t be used to produce oil or gas.

“A commitment of this magnitude further demonstrates how one of the world’s largest corporations is integrating scalable [DAC] into its net-zero strategy,” says Michael Avery, president and general manager of 1PointFive. “Energy demand across the technology industry is increasing, and we believe [DAC] is uniquely suited to remove residual emissions and further climate goals.”

Brian Marrs, senior director for carbon removal and energy at Microsoft, says DAC plays a key role in Microsoft’s effort to become carbon-negative by 2030.

The carbon dioxide will be stored at 1PointFive’s first industrial-scale DAC plant, being built near Odessa. The $1.3 billion Stratos project, which 1Point5 is developing through a joint venture with investment manager BlackRock, is designed to capture up to 500,000 metric tons of CO2 per year.

The facility is scheduled to open in mid-2025.

Aside from Microsoft, organizations that have agreed to buy carbon removal credits from 1Point5 include Amazon, Airbus, All Nippon Airways, the Houston Astros, the Houston Texans, and TD Bank.

Occidental says 1PointFive plans to set up more than 100 DAC facilities worldwide by 2035.

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