ExxonMobil Expects to Report a Profit Gusher in Q1. Can It Repeat That Feat With Crude Prices Falling?

Core Viewpoint - ExxonMobil anticipates a $900 million increase in quarterly profit due to higher oil and natural gas prices and improved refining margins, but faces challenges in Q2 as crude prices have dropped significantly [1][3][5]. Financial Performance - The company expects first-quarter earnings to be approximately$900 million higher than the previous quarter's profit of $7.4 billion, and about$100 million higher than the same quarter last year, which reported $8.2 billion [3]. - Brent crude averaged just under$75 per barrel, a 1.3% increase from Q4, while natural gas prices surged by 30% due to increased demand from a cold winter in the U.S. [4]. Market Conditions - Early Q2 has seen a decline in oil prices, with Brent crude dropping over 10% to around $65 per barrel due to tariff concerns, and natural gas prices in the U.S. falling more than 5$140 billion by 2030 in its best assets and aims for an additional $7 billion in cost savings, potentially delivering an extra$20 billion in annual earnings and $30 billion in incremental cash flow by 2030 [9][10]. Historical Performance - In the previous year, Exxon achieved$33.7 billion in earnings and $55 billion in cash flow from operations, marking its third-best year in a decade despite lower average refining and chemical margins [8]. - The company's strong performance was attributed to growth in high-margin assets and effective cost-saving measures [8]. Resilience to Volatility - While short-term earnings may be affected by fluctuating oil prices, Exxon's investments in low-cost assets and cost-cutting strategies are expected to mitigate the impact of price volatility in the long run [11].