April 29 - By Liz Hampton U.S. energy markets editor
Welcome to Power Up. I am Liz Hampton, the U.S. energy markets editor for Reuters and your Monday Power Up author. We'll kick off the week with a look back at first quarter earnings for top oil companies and refiners, which are all facing weaker results compared with records seen two years ago as lower natural gas prices and weaker refining margins bite into profits.
Last week marked a busy few days, with energy majors Exxon Mobil, TotalEnergies and Chevron reporting first-quarter results on Friday. Exxon missed Wall Street estimates after taking a hit from weak natural gas prices, while Chevron and TotalEnergies both beat expectations. Across the board, profits are down sharply year-on-year and well below records seen in 2022 after a surge in post-COVID-19 demand and Russia's invasion of Ukraine roiled markets and led to bumper profits. Year-over-year, Exxon's profits were off 28%, Chevron's fell 16% and TotalEnergies was down 22%. Earnings from Exxon's oil and gas production fell 14%, while its refining unit saw a 67% decline on weaker fuel margins, mark-to-market derivatives and higher maintenance costs.
Chevron did a little better, beating estimates as its oil volumes rose some 35% from a year ago due to its acquisition of PDC Energy and output in the Permian and Denver-Julesburg basins. While both U.S. majors took a hit from weaker fuel profits, TotalEnergies was able to offset weak natural prices with good refining margins. In the U.S. downstream world, refiner reports were mixed. Valero topped estimates, supported by strong demand from outages at Russian facilities following Ukrainian drone attacks and maintenance at U.S. refineries.
Phillips 66, however, missed as realized margins were down 47% due to seasonal maintenance at its plants, including catalytic units on the U.S. Gulf Coast. The company also reported a $180 million loss during the quarter related to its renewables conversion project at its Rodeo, California refinery. We've got a lot more ahead this week, with Marathon Petroleum reporting on Tuesday, Shell and ConocoPhillips on Thursday and a slew of natural gas and shale companies in between. Natural gas, which is still trading below $2 per million British thermal units (mmBtu) and traded negative in places like the Permian at the end of the quarter, will likely remain a major theme. And as always, we'll be on the lookout for any interesting comments around U.S. production, which continually surprises to the upside. ESSENTIAL READING
Anglo American rejected BHP's 31.1 billion pound ($39 billion) takeover offer on Friday, saying it significantly undervalued the miner and its future prospects.
Chinese state energy major PetroChina has been waiting to unload a cargo of U.S. crude at Nigeria's giant new refinery for nearly a month due to payment issues, according to four trading sources and shipping data.
The U.S. Environmental Protection Agency on Thursday finalized new regulations targeting pollution from power plants, including a landmark rule that requires sweeping reductions in carbon emissions from existing coal and new gas plants to combat climate change. The move is expected to usher in major legal challenges.
Oil refiner Phillips 66 reported a first quarter earnings miss on Friday, as seasonal maintenance and a renewable fuels conversion project at its Rodeo, California, refinery weighed on profits.
The United Arab Emirates will tender shortly for the construction of a new nuclear power plant that would double the number of the small Gulf state's nuclear reactors, three sources familiar with the matter said.
The second-largest U.S. liquefied natural gas $(LNG)$ export facility has been running below 80% of its capacity due to technical problems, data from financial firm LSEG showed, denting U.S. exports.
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(Editing by Marguerita Choy)
((liz.hampton@thomsonreuters.com))
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