Exxon Mobil Corp. cautioned analysts and investors that third-quarter earnings are likely to take a hit from lower crude oil prices.
In a Form 8-K on Oct. 1, the Texas-based major said third-quarter profits could run 50% lower on the year at $3.1 billion. Due to the absence of a previous tax benefit and softer oil prices, Exxon's upstream earnings could sink about $800 million on the quarter to $2.4 billion, which is down almost 45% from the $4.23 billion reported a year earlier.
"The biggest takeaways from Exxon — lower prices far more than offset some improvement in operational performance," Mizuho Securities analyst Paul Sankey wrote in an Oct. 2 note to clients.
Sankey lowered his earnings per share forecast for the world's largest publicly traded oil and gas company from more than $1.00 to 65 cents.
Despite spiking briefly in mid-September following drone attacks on a key oil facility in Saudi Arabia, global oil prices have largely declined during the third quarter. West Texas Intermediate crude oil prices on the New York Mercantile Exchange ended the Oct. 1 session at $53.62 per barrel, down about 9% from the start of the third quarter.

"Relative to our estimates, the greatest deltas as highlighted in the 8-K came in the upstream segment, where the combined move in commodity prices and maintenance reduction resulted in less upside to estimates than forecast," analysts from Tudor Pickering Holt & Co. wrote in an Oct. 2 note to clients.
The Tudor Pickering Holt analysts said that due to items highlighted in its 8-K, the EPS estimate on Exxon now sits closer to a range of 65 cents to 70 cents.
In the second quarter, Exxon reported GAAP net income of $3.13 billion, or 73 cents per share, for the second quarter, down from $3.95 billion, or 92 cents per share, in the same quarter a year earlier, as earnings in its downstream and chemical units were battered.
During the company's Aug. 2 earnings conference call, Exxon reaffirmed plans to ramp up spending, as the company works to hike upstream output and sell off $15 billion in assets by 2021 to sustain earnings growth.
Unlike many of its peers, which are working to keep a lid on capital expenditures, Exxon plans to spend $30 billion this year and $33 billion to $35 billion in 2020. The Texas-based major's capex in the second quarter totaled more than $8.0 billion, up 22% year over year due to key investments in the Permian Basin, it said.
Exxon will release third-quarter earnings results Nov. 1.
At 11:20 a.m. ET, Exxon's stock price on the New York Stock Exchange was down $1.06, or 1.6%, at $67.89 per share.
