Shares of major U.S. energy companies saw widespread declines during the first hour of trading Friday, following the recent release of moderate earnings reports from the oil giants. Exxon Mobil Corp. (NYSE:XOM) and Chevron Corp. (NYSE:CVX).
THE Selected Energy Sector SPDR Funds (NYSE:XLE), an energy sector performance gauge, saw a 1.7% decline, setting it up for its worst session since late January.
What happened: Exxon Mobil announced a disappointing start to the year with poor first quarter results.
The oil giant posted earnings per share (EPS) of $2.06, below the forecast of $2.189.
Although revenues exceeded expectations at $83 billion versus a forecast of $79.7 billion, net production fell slightly from 3.83 million barrels of oil equivalent per day for the same period of the year. last year at 3.78 million barrels of oil equivalent per day.
Adjusted net profit also fell to $8.22 billion from $11.62 billion a year earlier, hurt by lower refining margins and natural gas prices.
Also Read: Exxon Mobil Stock Falls After Q1 Results – Here’s Why
Chevron managed to align more closely with analyst expectations, generating EPS of $2.93 compared to the projected $2.99.
Revenue saw a slight decline to $48.7 billion from $48.4 billion. Chevron’s upstream business beat forecasts, posting a profit of $5.501 billion versus an expected $5.12 billion, although the first-quarter figure was lower than the previous year’s $6.574 billion.
Chevron also provided updates on its ongoing merger process with Hess Corp. (NYSE: HES), indicating progress toward compliance with regulatory requirements.
Also read: Chevron’s strategic advances in oil production overshadowed by first quarter revenue shortfall
Furthermore, another oil player, Phillips 66 (NYSE:PSX), which ranks as the seventh largest component of the XLE ETF, also reported lower-than-expected earnings and revenue.
Why is this important: Energy emerged as the best-performing sector in the S&P 500 this year, with the XLE index up 14%. However, that lead is shrinking as major oil companies such as Exxon Mobil and Chevron exit.
Together, Exxon and Chevron account for about 40% of the holdings in the major energy-related ETF, highlighting their significant influence on the sector.
If their stocks do not rebound, the consequences could extend beyond these industry giants, potentially affecting the performance of smaller entities in the sector.
Market reactions: As of 11:15 a.m. ET, shares of Exxon Mobil Corp. had fallen nearly 4%, marking their worst potential day since mid-March 2023.
Shares of Chevron Corp. fell a modest 0.8%, threatening to end a seven-day winning streak.
Additionally, the Phillips 66 saw a sharp decline, falling 4% and creating what could be its worst trading day since October 2023.
| Energy company | % Weight in XLE | % change over 1 day |
| Exxon Mobil Corporation | 23.24 | -4.01% |
| Chevron Corporation | 16.84 | -0.80 |
| ConocoPhillips (NYSE:COP) | 9:00 a.m. | -0.46 |
| EOG Resources, Inc. (NYSE:EOG) | 4.64 | -0.34 |
| Marathon Oil Company (NYSE:MPC) | 4.31 | -1.34 |
| Schlumberger Limited (NYSE:SLB) | 4.15 | -0.74 |
| Phillips 66 | 3.97 | -4.03 |
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