Lower Oil Prices May Reflect On Finances Of Oil Majors

Top international oil and gas majors are expected to report in the coming weeks their lowest quarterly earnings in three years.

Lower oil and gas prices, weaker oil trading and Liquified Natural Gas (LNG) business at some of the European majors, and declining margins across the board are expected to weigh on the fourth-quarter earnings of ExxonMobil, Chevron, BP, Shell, and TotalEnergies, according to analysts and trading updates from the majors themselves.

The declining profits, which will remain in the billions of U.S. dollars, are set to squeeze the supermajors’ financial frames and potentially put share buybacks and dividends under pressure. Big Oil will continue to prioritize these returns to investors, so they may have to borrow more and/or accelerate cost-cutting measures, according to a Bloomberg report.

For the third quarter, record production helped the U.S. supermajors Exxon and Chevron beat analyst estimates, offsetting most of the negative impact from lower oil and gas prices compared to a year ago and very weak refining margins, especially in Europe.

For the fourth quarter, some of the supermajors have already warned of weaker results for Q4 compared to the previous quarter.

Weak oil trading and declining refining margins are expected to lower the fourth-quarter earnings at BP. The UK-based supermajor forecasts that weaker realised refining margins will dent the Q4 earnings by up to $300 million. Refinery turnaround activity is also set to have a higher impact for the fourth quarter compared to the third quarter.

Shell, for its part, expects its LNG production and trading and oil trading businesses to book significantly lower results for the fourth quarter of 2024, due to seasonality and timing of lifting.

ExxonMobil has also flagged a weaker profit for the fourth quarter of 2024 because of lower refining margins, estimating the size of the negative impact at $1.75 billion.

Shell reports Q4 earnings on Thursday, Exxon and Chevron on Friday, TotalEnergies on February 6, and BP on February 11.