Big oil earnings: Three things to watch for as ExxonMobil, Chevron and Phillips 66 report financial results today

Today, big oil is firmly in the spotlight, with ExxonMobil, Chevron, TotalEnergies, Phillips 66 and Imperial Oil all reporting their latest earnings within hours of each other.

It may well make for interesting viewing too, since the oil market has been anything but straightforward lately.

In terms of overall larger sentiment towards oil and gas, the world’s more advanced countries and companies have been working hard to reduce carbon emissions and dependence on fossil fuels for some time.

As a result, the crude oil price has been subjected to a lot of uncertainty longer-term.

The crude oil price in more detail

Here is what Ritesh A. has to say on the oil price:

Oil prices, which have remained relatively steady compared to the same period last year. While in Q1 2023, WTI oil traded mostly between $72-$80, this year, it showed a gradual upward climb from $70 to $83. However, natural gas prices took a significant hit in Q1, along with slightly lower gasoline prices, contributing to the downward adjustments in estimates.”

Crude oil prices to drop 10% this year? Read the Invezz research report

Here is what David Morrison, analyst at financial services provider Trade Nation, has to say about this week’s oil price:

Both Brent and WTI prices are up for the week, and effectively unchanged for April, so far. Investors have largely shrugged off concerns over the escalation of hostilities across the Middle East, just as they have recently over the war in Ukraine. Instead, there’s continued uncertainty over future demand growth, particularly as the US Federal Reserve has indicated that it will keep interest rates higher for longer.”

These are nuanced and complex waters for oil companies to navigate – and oil investors will certainly need to do their research before dialing into earnings calls today.

Three things for oil investors to watch during Exxon, Chevron and Phillips earnings

Broadly speaking, here are the things which investors will be watching carefully today in the big oil earnings reports:

• Improving EBITDA
• BOE production figures
• News on diversification into other green energy avenues

Improving EBITDA

Big oil companies tend to make lots of acquisitions and are constantly either exploring or developing new reserves. As a result, the companies’ debt can severely skew the less descriptive numbers in an earnings report, like revenues or even net income.

Here, EBITDA can be a good benchmark for how an oil stock is doing. Particularly, an EBITDA that has improved year-on-year and quarter-on-quarter is an encouraging sign.  

BOE production figures

Oil companies’ production outputs are generally reported in barrels of oil equivalent per day (BOE/d) in their earnings.

These numbers, too, will be carefully scrutinized by investors today – especially because the companies are all reporting on the same time period and during the same day, giving an easier way to compare them.

If the BOE figures coming out of one of the businesses is conspicuously higher than its competitors, chances are high that this particular oil company’s oil and/or gas is trading at a higher price relative to that of the other big oil stocks.

Similarly, a lower BOE figure will represent the opposite.

Since TotalEnergies is the only European big oil stock reporting today (the others are all American), we already have their numbers.

During the first quarter, oil and gas production was 2.46 Mboe/d (million barrels of oil equivalent per day), benefitting from a 6% quarter-to-quarter production growth in LNG.”

News on green energy avenues

Again, we can use TotalEnergies as a yardstick here. Earlier this morning, Total said the following in its earnings report:

The company strengthened its integration in the LNG (liquefied natural gas) value chain with the acquisitions of Lewis Energy Group’s upsteam natural gas assets… The company further deployed its multi-energy strategy in Oman, launching the fully-electric and very low emissions Marsa LNG project that targets the marine fuels market and developing an 800 MW portfolio of wind and solar projects… and advanced its development of Sustainable Aviation Fuels (SAF)…”

The stronger the evidence of multiple streams of income (pun intended) from different energy sources, the more likely oil investors are to rest easy.

So, what will the Exxon, Chevron and Phillips earnings bring?

Again, Ritesh A. has insight into these specific stocks ahead of their reporting later:

Exxon and Chevron, both are demonstrating resilience on the charts leading up to earnings, despite analysts’ downward revisions on year-over-year estimates. Despite comparatively lower estimates, Exxon appears stronger in both short-term and long-term charts, while Chevron has been on a downward trajectory and faces resistance at $172. If it breaks above $172, we could conclusively say that the stock has broken free from bearish control.”

Longer-term oil prospects

Overall, Ritesh says that there is reason to be somewhat bullish on oil overall going forward:

Looking ahead, my outlook on oil remains cautiously optimistic. While concerns about weak demand may limit rapid price increases, I expect oil to maintain above $72 in the short to medium term. Currently, geopolitics rather than supply and demand dynamics play a significant role in determining oil prices, necessitating an embrace of volatility, particularly on the upside, in the short run.”

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