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Exxon has warned that its third-quarter earnings would likely be affected by lower oil prices, with the impact in the range of $600 million to $1 billion.
In an SEC filing, the supermajor also estimated the effect of lower refining margins on its third-quarter earnings at up to $1 billion.
International crude oil prices were on average 17% lower during the third quarter of the year than the second, Reuters noted in a report on the Exxon update. The decline followed softening demand for oil from China and elsewhere. However, demand for oil in Exxon’s home market turned out to be surprisingly resilient, hitting a four-year high this summer, according to the Energy Information Administration.
The update follows an expectations-beating second quarter when Exxon booked its second-highest earnings for a second quarter in a decade as the acquisition of Pioneer Natural Resources fueled a record quarterly production and the highest oil production since the Exxon and Mobil merger.
The Pioneer deal contributed $500 million to earnings in the first two months post-closing with record production, and integration and synergy benefits are exceeding expectations, the supermajor said in August.
The transaction handed Exxon access to over 1.4 million net acres in the Delaware and Midland basins in the Permian.
“We delivered our second-highest 2Q earnings of the past decade as we continue to improve the fundamental earnings power of the company,” chairman and chief executive officer Darren Woods commented.
Yet refining margins were already lower in the second quarter, dampening the performance of that segment even as upstream performance remained robust, at $7.1 billion out of a total $9.1 billion in net profits.
Exxon noted, however, that the lower margins were a correction after “historically high prior year levels as demand growth was more than met by capacity additions.”
The supermajor is reporting third-quarter performance numbers on November 1.
