By Sheila Dang and Mrinalika Roy
HOUSTON (Reuters) -Analysts on Wednesday lowered their fourth-quarter earnings estimates for Exxon Mobil (NYSE:XOM), the day after the top U.S. oil producer warned that reduced prices and margins could hurt quarterly results.
Shares of Exxon declined 1.4% to $107.17 in midday trading. The earnings snapshot from the industry bellwether signaled a tougher quarter for oil producers, which will begin publishing results this month.
Mizuho (NYSE:MFG) Americas lowered its earnings per share estimates for Exxon by 13% to $1.55, analyst Nitin Kumar wrote in a note to investors. Tudor Pickering Holt & Co. also cut its quarterly earnings view by 15%, to $1.49 per share, citing Exxon's disclosure.
On Tuesday, Exxon indicated fourth-quarter earnings would be about $1.75 billion below the prior quarter's. Official results are due Jan. 31.
Exxon's outlook is "consistent with revisions seen for independent refiners and other majors with heavy refining exposure," Biraj Borkhataria, an oil analyst with RBC (TSX:RY) Capital Markets, wrote in a note to investors.
The snapshot likely will weigh on its shares in the near term, he added.
The company indicated lower margins on sales would shave between $300 million and $700 million from oil refining and another $400 million from chemicals, compared to the third quarter profits.
Impairments across its businesses would cost about $600 million, offset by gains from some asset sales, higher natural gas prices and an improved tax outlook.
Exxon and other oil companies have seen lower profits from refining crude oil and selling petroleum products after a post-pandemic boom in demand ran its course. Demand for gasoline and diesel has lagged expectations globally, and the opening of big plants around the world have weighed on refining margins.
Exxon is one of the world's largest refiners with global refining capacity of 4.5 million barrels of oil per day. It is also one of the world's largest manufacturers of commodity and specialty chemicals.
The company had been expected to deliver a profit of $1.76 per share in the fourth quarter, according to data compiled by financial firm LSEG. The oil major posted earnings of $2.48 per share a year earlier.
Exxon's shares rose 7.6% in 2024, underperforming the S&P 500's 23.3% gain.