Exxon Mobil (XOM) Stock Falls as Oil Giant Warns of $1.2B Q4 Earnings Hit

TLDR

• Exxon Mobil stock faces Q4 pressure as crude prices could cut upstream profit by $800 million to $1.2 billion
• Brent crude dropped 19% and WTI fell nearly 20% in 2024, marking three straight years of losses
• Natural gas price volatility could swing Q4 earnings from a $300 million loss to $100 million gain
• Refining margins may provide relief, potentially adding $300 million to $700 million in downstream profit
• Company reports Q4 earnings January 30 with analysts expecting $1.66 per share

Exxon Mobil stock investors face potential trouble ahead. The oil giant warned that falling crude prices could slash upstream profit by $800 million to $1.2 billion in Q4.

Exxon Mobil Corporation, XOM

The company filed the regulatory update ahead of its January 30 earnings release. Wall Street analysts currently expect adjusted earnings of $1.66 per share for the quarter.

Exxon becomes the first major oil company to issue earnings guidance for Q4. The warning signals other energy stocks may face similar pressure when reporting results.

Crude Prices Tumble Through End of 2024

Oil prices declined 9.2% during the three months ended December 31. Brent crude dropped 19% for the full year, the steepest annual decline since 2020.

U.S. West Texas Intermediate crude fell nearly 20%. Both benchmarks posted their third consecutive year of losses, the longest losing streak on record.

Oversupply concerns and tariff pressures drove prices lower. These factors outweighed geopolitical risks and squeezed upstream margins across the sector.

Natural gas prices add another layer of uncertainty. Price changes could impact quarterly upstream earnings anywhere from a $300 million loss to a $100 million gain.

The downstream business looks stronger. Refining margins could boost Q4 earnings by $300 million to $700 million.

This potential upside may offset some upstream weakness. But it likely won’t fully compensate for crude price declines.

Restructuring Charges Hit Bottom Line

Restructuring costs will reduce overall profit by approximately $200 million. The company announced plans late last year to cut costs and boost profitability.

The strategy aims to help Exxon weather oil price volatility. However, near-term restructuring expenses will pressure Q4 results.

Scotiabank analysts noted many brokers haven’t adjusted estimates for lower oil and gas prices. This could lead to downward earnings revisions in coming weeks.

Exxon posted $5.7 billion in upstream earnings for Q3. Total profit reached $7.5 billion during that period.

The company’s Q4 snapshot is closely watched by investors. Results often signal how other oil stocks will perform during earnings season.

Analysts maintain a Moderate Buy rating on XOM stock with 11 Buy and seven Hold ratings. The average price target of $132.76 implies 12.05% upside from current levels.

Exxon reports Q4 earnings on January 30. The results will show how effectively the company managed through one of crude’s worst years in recent history.

The post Exxon Mobil (XOM) Stock Falls as Oil Giant Warns of $1.2B Q4 Earnings Hit appeared first on Blockonomi.