Exxon Mobil profit sinks on weakness in chemicals, refining

MOSCOW (MRC) -- Exxon Mobil Corp reported a 21% drop in quarterly profit, its third period in a row of weaker year-over-year results, as sharply higher oil production was offset by weaker refining and chemicals business, said the company.

Shares slipped 1.6 percent to USD71.34 in early trading even though its 73 cents a share profit topped analysts’ recently-lowered estimates. Analysts had reduced estimates to 66 cents per share after Exxon last month guided to lower year-over-year profit.

Exxon’s weaker earnings mirrored those at rivals Royal Dutch Shell, Equinor and Total SA. Shell posted its smallest profit in 30 months on weaker margins in chemicals, a loss in refining and tumbling natural gas prices. Total also cited weaker natural gas and refining operations for earnings that fell 19% from a year ago, while Equinor’s profit fell 27% on weaker oil and gas prices.

A bright spot for Exxon was oil and gas production rising 7% to 3.9 million barrels per day. Output in the top U.S. shale field, the Permian Basin, rose to 274,000 barrels of oil and gas per day, up 90% from a year ago.

“Three of our businesses were at lows in their cycles,” said Neil Chapman, an Exxon senior vice president, adding the company historically invests during downturns for long-term returns.

The largest U.S. oil producer’s net income fell to USD3.13 billion, or 73 cents per share, in the second quarter, from USD3.95 billion, or 92 cents per share, last year. “Pretty weak quarter from them once again,” said Jennifer Rowland, analyst with Edward Jones. After capital spending and dividends, Exxon had a free cash flow shortfall of USD2.7 billion, similar to last quarter, Rowland added.

Exxon has made “limited progress on asset sales,” though, analysts at Tudor, Pickering, Holt & Co said in a note to clients. Exxon’s Chapman said the company remains committed to selling USD15 billion worth of assets through 2021.

The sales are needed to finance shareholder returns and major projects, but Exxon reported just USD33 million in asset sales for the period, the lowest in at least 12 quarters. That follows proceeds from sales of USD107 million in the first quarter.

Exxon’s chemicals business fell to a loss in the United States for the first time in at least three years. Lower margins and downtime drove refining profits down 88 percent over last year.

Exxon had been investing in major projects to boost production at a time when investors have been pressing oil companies to cut back on spending and increase returns to shareholders. The company said it has its best portfolio since the merger of Exxon and Mobil and does not “have to do anything” in terms of adding assets, Chapman said.

But in the Permian Basin, where the company holds 1.6 million acres and plans to use its size and scale as a competitive advantage, Chapman said it remains, “eyes wide open” about mergers and acquisitions.

Exxon boosted its estimated recoverable reserves in its offshore Guyana project to more than 6 billion barrels of oil equivalent, from 5.5 billion barrels.
MRC

MOSCOW (MRC) -- IRPC Public Company Limited (IRPC) has reported its 2Q19 consolidated financial statement through the Stock Exchange of Thailand, said Kaohoon.

The net profit of IRPC in the second quarter of 2019 was THB 506.93 million, decreased 87.48% YoY while the profit for six months in 2019 plunged by 90.30% mainly due to the decrease of average selling prices following the crude oil price. The crude intake was 203,000 barrels per day down by 8,000 barrels per day because the RDCC unit ceased the operation for 28 days in the first quarter.

IRPC had mMarket GIM of THB 10,387 million or USD 8.90 per barrel, decreased by THB 6,675 million or 39% from 1H/2018 as a result of the significant decrease of both petroleum and petrochemical products spread. The spread decrease was affected by many factors including the prolonged U.S-China trade war, the new capacity in the region and the increasing production rate in the U.S.

As a result of baht appreciation, the Company had foreign exchange gain of THB 340 million, increasing by THB 316 million.

However, the decrease of IRPC’s profit was better or inline to what analysts had expected. Maybank expected IRPC to report a profit in 2Q19 at THB 517 million. Tisco expected THB 506 million. KGI expected THB 509 million while Trinity expectedTHB 517 million and KS expected THB million.
MRC

MOSCOW (MRC) -- Westlake Chemical (WLK) came out with quarterly earnings of USD0.92 per share, beating the Zacks Consensus Estimate of USD0.84 per share, said Finance.

This compares to earnings of USD2.45 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 9.52%. A quarter ago, it was expected that this chemical company would post earnings of USD1.38 per share when it actually produced earnings of USD0.94, delivering a surprise of -31.88%.

Over the last four quarters, the company has surpassed consensus EPS estimates two times.

Westlake, which belongs to the Zacks Chemical - Plastic industry, posted revenues of USD2.14 billion for the quarter ended June 2019, surpassing the Zacks Consensus Estimate by 2.15%. This compares to year-ago revenues of USD2.24 billion. The company has topped consensus revenue estimates two times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

Westlake shares have lost about 6.4% since the beginning of the year versus the S&P 500's gain of 13.5%.
MRC

MOSOCW (MRC) - Negotiations on European polyvinyl chloride (PVC) prices for August delivery into the CIS markets were actively conducted last week. Despite a slight increase in ethylene prices, European producers did not proportionally increase in PVC export prices, according to ICIS-MRC Price report.

August contract price of ethylene was agreed up by EUR10/tonne from July, which theoretically should lead to an increase of EUR5/tonne in PVC production costs.

Nevertheless, despite a slight increase in the cost of the main raw material, ethylene, European producers rolled over the August export prices of PVC for deliveries to the markets of the CIS countries in August.

Demand for PVC increased from the main consumers in the CIS countries in July-August under the pressure of seasonal factor and tight supply from domestic producers. But due to planned and unscheduled shutdowns of some plants, some producers limited export quotas, in particular K70.

Deals for August shipments of suspension PVC (SPVC) to the CIS markets were held in the range of EUR710-785/tonne FCA.
MRC

MOSCOW (MRC) -- Eni and ADNOC, Abu Dhabi’s National Oil Company, said they closed their strategic partnership, announced in January, through which Eni acquired a 20 percent equity interest in ADNOC refining, said Hydrocarbonprocessing.

The partners – which include Austria’s OMV – also set up a new trading joint venture.

ADNOC Refining refines in excess of 922,000 barrels per day of crude at its Ruwais and Abu Dhabi based refineries. The transaction is one of the world’s largest-ever in the refining business and reflects the scale, quality and growth potential of ADNOC Refining’s assets. Ruwais is the 4th biggest single-site refinery in the world and is the focus of further expansion and integration to develop the world’s largest single-site refining and petrochemicals complex. Expanding its refining and petrochemical operations at Ruwais supports ADNOC as it evolves to become a leading global downstream player.

The final cash price is approximately USD3.24 billion.

ADNOC, Eni and OMV have now incorporated a new trading joint venture at Abu Dhabi Global Market, with the same shareholding as in ADNOC Refining. Trading is expected to begin in 2020 when all necessary processes, procedures and systems are in place. Eni and OMV will provide ADNOC with know-how, operational experience and support to accelerate the development of the trading joint venture, enabling ADNOC and its partners to optimize their systems and better manage their international product flows.

These agreements demonstrate the strong partnership between Eni and ADNOC. With this transaction, Eni enters the UAE downstream sector and increases its global refining capacity by 35%. It follows the company’s strategy of making Eni’s overall portfolio more geographically diversified and more balanced along the value chain.

Eni has been present in the UAE upstream sector since March 2018 when it was awarded a 10 percent interest in ADNOC’s Umm Shaif and Nasr concession and a 5 percent interest in the Lower Zakum concession, followed in November 2018 by the award of a 25 percent interest in the Ghasha Concession, ADNOC’s mega offshore sour gas project. On 12 January this year Eni was awarded a 70 percent interest in offshore exploration blocks 1 and 2. In addition to the United Arab Emirates, in the Middle East Eni is also present in Oman, Bahrain, Lebanon and Iraq.
MRC