Exxon Mobil Filed an 8K Thursday. What Wasn’t in the Filing Could Be Concerning. - Barron's

Exxon Mobil provided an update on its second-quarter outlook on Thursday, and it could mean a rocky second-quarter earnings release for the oil giant, according to Cowen & Company.

In its latest 8K filing, Exxon (ticker: XOM) detailed the ongoing headwinds from the Covid-19 pandemic to both upstream and downstream businesses. (Upstream operations refer to exploration and production, and downstream is refining activity.) The company expects it will lose between 43 cents and 95 cents a share in the second quarter; the middle of that range is a 69-cent loss, larger than the average analyst estimate of 55 cents. The company is expected to report earnings toward the end of the month.

“The release suggests fears for a very weak quarter will materialize while the release alone does not de-risk the earnings print given additional questions around dividend policy and heightened focus on impairments,” writes Cowen’s Jason Gabelman. In other words, the coming earnings report may be a tough one—not only because of a larger-than-expected loss, but the potential for more bad news that wasn’t included in the filing.

“Moreover, given the current environment, Exxon will likely need to continue defending its long-term view of energy growth that underpins its counter-cyclical capital expenditure program that could ramp back up next year,” he writes. That means it will be tough for the company to rein in its spending.

Gabelman reiterated a Market Perform rating and $34 price target on the shares. Other analysts have also expressed concerns about Exxon’s dividend and cash position.

Still, the market was little concerned about that today. Exxon stock finished up 0.9% at $44.12 Thursday, along with the rest of the market on the latest jobs figures. However, the shares are still down nearly 36% year to date.

Write to Teresa Rivas at teresa.rivas@barrons.com

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