The energy sector has been out of investors' favor in recent months as oil prices tumbled 24% from a high of $107.26 per barrel recorded in June. The boom in U.S. oil production and waning global demand took a toll on the commodity price and the energy stocks.
However, better-than-expected earnings from two U.S. oil giants – Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX) – on Friday before the opening bell spread bullishness in the entire sector. Both firms bucked the trend of falling profits from large international oil majors like BP plc (NYSE: BP), Total SA (NYSE: TOT) and ConocoPhillips (NYSE: COP) amid lower oil prices and strongly beat on the bottom line (read: BP Earnings Strength Put Global Energy ETFs in Focus).
While these firms witnessed revenue decline on an annual basis and are still struggling with shrinking production volumes, low raw material costs boosted refining and chemical operations that offset the sagging oil and gas production business.
Earnings in Detail
The largest U.S. oil company, Exxon Mobil, reported earnings per share of $1.89 that strongly outpaced the Zacks Consensus Estimate of $1.75 and the year-ago earnings of $1.79. Total revenue slipped 4.3% year over year to $107.5 billion but was well ahead of the Zacks Consensus Estimate of $101 billion.
Oil and gas production fell 4.7% to the equivalent of 3.83 million barrels a day, representing the lowest level in almost five years. Despite this, the company is on track to produce 4 million barrels of oil per day by the end of this year.
Earnings at Chevron, which trails Exxon Mobil, came in at $2.95, outpacing the Zacks Consensus Estimate of $2.54 and improving from the year-ago earnings of $2.57. Revenues dropped 6.5% year over year to $54.68 billion and were much below our estimate of $56.66 ...
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