ExxonMobil and Chevron to disappoint Wall Street despite the price of oil

The logo of the Exxon on September 20, 2008 in Manassas Virginia (Photo by KAREN BLEIER. AFP FILES)

ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX), the first two majors, us oil, have disappointed Wall Street on Friday by announcing they have earned less money than hoped for in 2017, in spite of the rebound in oil prices.

On the paper, ExxonMobil has generated an annual net income of 19,71 billion, of which $ 8.38 billion in the fourth quarter, and Chevron, an annual profit of $ 9.2 billion, of which $ 3.1 billion in the last three months of the year.

But this is in large part due to accounting effects, which were enhanced more than 7 billion, the profitability of the first and $ 2 billion during the second. The two oil giants have had to change their accounting to take into account the recent tax reform american lowering in particular the corporate income tax rate of 35% to 21%.

When we remove these tax credits, earnings per share, reference, North America, Exxon is less than 15 cents to the forecasts of financial analysts for the fourth quarter and the Chevron of 55 cents in the fourth quarter, and despite a strong appreciation in oil prices.

Royal Dutch Shell (AS:RDSa) and ConocoPhillips (NYSE:COP), two of their rivals, have yet reported results supported by the rebound of the gold price, the first tripling almost its net profit in 2017 to $ 13 billion, and the second releasing his best bébéfice in three years.

The course of the black gold ended the year 2017 to around 60 dollars, a jump of 15% year on year, supported by the depreciation of the dollar, solid demand, a result of the global economic recovery and the efforts of the Organization of petroleum exporting countries (Opec) and other producers such as Russia, which have limited their production to reduce supply on the market.

Has Wall Street, Exxon has experienced one of its worst sessions since the summer of 2016. The title has plunged 5.10% 84,53 dollars, while Chevron has tumbled 5.57% to 118,58 usd.

– No redemption of shares –

The performance of the first two groups of hydrocarbons americans suggest that they have not yet found the recipe to restart their growth engine in failure since the plunge in oil prices in the spring of 2014, that confirms the decline of their respective production.

The production of black gold and gas as Exxon, for example, has decreased in the fourth quarter of 3% to 4 million barrels of oil per day (mb/d), where the markets were waiting to 4.16 mb/j. The Chevron is of 2.74 mb/d, compared to a mere 2.80 mb/d expected by the markets, even if he attempted to reassure by saying it had discovered new fields blank.

The problem, said Jason Gammel, an expert at Jefferies, it is the dependency of the two groups to their wells outside the United States. However those were not at the rendez-vous 2017, in particular the eu production of natural gas for Exxon, which has markedly decreased.

“The production volumes are lower than anticipated,” says Doug Terreson at Evercore.

Aware of these difficulties, Exxon and Chevron have launched each an offensive to strengthen their operations in the United States and in south America.

Darren Woods, who was replaced a year ago Rex Tillerson in the head of Exxon, promised on Tuesday to invest $ 50 billion in the next five years on american soil.

He wants the case to triple the production of Exxon to 600.000 mb/d by 2025 in the basin, permian, an area that straddles the Texas and New Mexico (south of the United States) focusing of the reserves of oil shale.

The officer has also made acquisitions in Brazil and Mozambique and is investing a lot in Guyana, where Exxon has discovered new hydrocarbon fields.

Chevron for its part on the production of the mega-project of liquefied natural gas (LNG) Gorgon in Australia and new wells in Kazakhastan.

In the meantime, the two oil giants have to deal with investors in search of juicy dividends while the stock markets line up of records for a year.

“Exxon has showered the hopes of a share buyback program”, ahead of the bank JPMorgan Chase (NYSE:JPM), who sees it as an element justifying the drop in the stock on Friday. “Why not to launch share buy-backs to “reward investors for their patience+?”, queries-t-it.

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