Exxon, Chevron Earnings, S&P Energy Stocks Trade Lower
Stocks in the U.S. energy sector traded lower Friday after two big players reported first quarter earnings that were pressured by higher oil prices due to the U.S.-Iran war.
The futures price for WTI crude, the U.S. benchmark, settled at $101.94 per barrel Friday, up 7.44% for the week. Verbal sparring continued between U.S. and Iranian leaders, leaving oil shipments headed through the Strait of Hormuz stalled. Meanwhile the United Arab Emirates, strategically positioned next to Saudi Arabia with coastline facing the Strait, the Persian Gulf and Iran, announced its departure from the Organization of Petroleum Exporting Countries (OPEC).
On Friday, an unusual, bearish trade in Expand Energy (EXE) accounted for significant options volume on the session. Shares were recently at $100.32, down 1.8% but still up 4% this week. The bearish buy order for 11,000 contracts of the June 18 $90 puts resulted in a $1.13 million premium outlay, with the trader betting the stock will move lower to generate a profit.
Shares of big oil player Exxon Mobil (XOM) declined Friday but were up more than 2% on the week, after it reported first-quarter adjusted earnings of $1.16 per share, ahead of Street estimates. Cash flow from operating activities was $8.7 billion, or $13.8 billion "excluding margin postings, which primarily fluctuate with the fair value of underlying derivatives." Chairman and CEO Darren Woods said in a press release that "events in the Middle East" tested the company’s ability to perform through disruption and across market cycles, "with the safety of our people remaining our top priority." But he emphasized that Exxon has, since 2018, "grown advantaged volumes, optimized our operations, reduced structural costs, and strengthened our earnings power."
Chevron (CVX) shares were off 1.6% midday after the oil exploration and production giant reported earnings; shares are up more than 2.7% on the week. Chevron produced adjusted earnings of $1.41 per share vs estimates calling for $0.95. It “ran its U.S. refineries at their highest ‘throughput’ levels ever in March, CFO Eimear Bonner told Barron's Friday. Chevron’s CEO Mike Wirth said the company is recovering debt in Venezuela at a faster rate due to higher oil prices, Bezinga Newswires reports.
Rob Thummel at Tortoise Capital told Schwab Network’s Jenny Horne that Chevron’s earnings were emblematic of the sector, with uncertainty about future oil volumes and prices, and the opening of the Strait of Hormuz.
See Inside Out: CVX, XOM & Energy Stocks | Morning Trade Live| Schwab Network.
Also see RDDT Rallies, EL Shines, CVX/XOM Earnings Breakdown | Schwab Network
Exxon, ConocoPhillips (COP), and some smaller U.S. energy companies were in Caracas, Venezuela this week to talk investing opportunities, The Wall Street Journal reports today. It will take much investment to rebuild crumbling, nationalized infrastructure there; the interest is a “stark U-turn from the beginning of the year,” WSJ notes. “Both companies sued Venezuela after the country nationalized their assets nearly 20 years ago. Conoco is still seeking $12 billion in restitution; Exxon $1 billion.” The idea is that energy players with global experience in “heavy” crude may be able to leverage tactics to extract Venezuela’s heavy oil in a cost-efficient way.
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