Exxon, Chevron Report Mixed Quarters

Oil giants Chevron Corp. (NYSE: CVX) and Exxon Mobil Corp. (NYSE: XOM) reported mixed earnings on Friday morning as the lull in the global oil market persisted throughout the second quarter.

Exxon shares initially traded lower by 2 percent after the company reported earnings per share of 78 cents, just shy of consensus analyst expectations of 84 cents. Exxon’s revenue of $62.9 billion topped analyst forecasts of $61.9 billion. EPS shot up 90 percent from a year ago, while revenue was up 9 percent.

The revenue uptick was led by Exxon’s upstream segment, which nearly tripled revenue from a year ago to $1.2 billion in the second quarter. The upstream segment includes oil and gas exploration and production.

Downstream revenue, including crude-oil-refining operations, increased 66 percent to $1.4 billion.

Cash flow from operations also jumped 50 percent to $6.9 billion. Capital expenditures declined 24 percent to $3.9 billion.

Chevron reported EPS of 77 cents, missing consensus analyst expectations of 87 cents. Revenue came in at $34.48 billion, ahead of consensus estimates of $32.09 billion.

Chevron reported $853 million in income from its upstream segment, a huge improvement over the $2.46 billion loss it reported a year ago. Income from its downstream segment declined 6.4 percent to $1.195 billion.

Cash flow from operations was $8.9 billion, up from $3.7 billion a year ago. Capital expenditures were $8.9 billion, down from $12 billion in the same quarter of 2016.

Crude oil prices drifted lower throughout the second quarter, and analysts are growing increasingly skeptical that a significant recovery in the global oil market is on the horizon. Earlier this month, Goldman Sachs analyst Damien Courvalin said the oil market needs either a more aggressive production cut by OPEC or evidence of a consistent decline in U.S. crude oil stockpiles and rig counts to stop the bleeding.

“A failure for these shifts to materialize soon could push prices below $40 per barrel as the market tests OPEC’s and shale’s reaction functions,” Courvalin said.

Courvalin’s comments came just days after RBC Capital Markets analyst Biraj Borkhataria downgraded Chevron from “sector perform” to “underperform” and Exxon from “outperform” to “sector perform.” Borkhataria said analyst cash flow estimates are “too optimistic over 2017/18.”

Despite the bleak longer-term outlook, oil prices have…

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