Exxon Mobil (XOM) shares firmed Friday after the fossil-fuel titan estimated that rising oil and natural-gas prices will lift its third-quarter earnings by $700 million to $1.5 billion.
In a Securities and Exchange Commission filing Exxon said oil will likely give a $200 million to $600 million fillip, while gas will likely offer a $500 million to $900 million boost.
U.S. oil prices have soared 54% year to date, recently trading at $74.54. Natural-gas prices have more than doubled this year.
Exxon said refining margins also will likely lift third-quarter earnings -- $500 million to $700 million. But it predicted chemicals margins will subtract $200 million to $400 million.
The stock of the recently traded at $59.73, up 1.6%.
Morningstar analyst Allen Good puts fair value for narrow-moat Exxon at $74.
“Exxon turned in a strong second quarter, buoyed by a recovery in commodity prices and a record quarter from its chemical segment,” he wrote July 30.
“Fundamental improvement is ongoing while higher commodity prices should assist in deleveraging. Exxon delivered over $1 billion in structural efficiencies improvements during the first half of the year.”
Further: “We expect Exxon to maintain focus on capital discipline, given recent activist pressure, new board members, and past relative underperformance,” Good said.
“Management reiterated that capital spending will come in at the low end of its $16 billion-$19 billion guided range. As such, shareholder returns should follow once debt falls into management’s preferred range of 20%-25%.
“Given valuation and potential for improvement, we think Exxon remains an attractive option in the sector.”