-- Chevron (CVX) and ExxonMobil (XOM) are to post Q1 results this week, with consensus EPS at $1.02 and $0.94, respectively, amid war-driven market volatility, RBC Capital Markets said in a Tuesday note.
Chevron could report adjusted EPS of $1.02 per share versus RBC's $0.83 estimate, while cash flow from operations may reach $6.72 billion compared with $6.26 billion forecast, RBC said.
The company's upstream segment may gain $1.6 billion to $2.2 billion from stronger commodity prices, while production could range between 3.8 million and 3.9 million barrels of oil equivalent per day, RBC added.
Chevron faces negative downstream timing impacts of $2.7 billion to $3.7 billion after tax due to the Middle East conflict, although these effects should reverse over time, the note said.
Chevron maintains limited exposure to the Middle East, with regional liquids accounting for just over 1% of output compared with 8% for Exxon and 11% to 19% for European peers, RBC said.
RBC expects Chevron may raise its share buyback guidance above the current $10 billion to $20 billion range, with consensus estimating $3.7 billion for Q2 and $13.7 billion for the full year, it said.
ExxonMobil could post adjusted EPS of $0.94 per share versus RBC's $1.17 estimate, while cash flow may total $10.62 billion compared with $14.45 billion forecast, RBC said.
The company reported negative timing effects of $3.5 billion to $4.9 billion, equivalent to about $0.93 per share at the midpoint, which it expects to reverse over time, the note said.
Exxon expects volume disruptions in the Middle East to reduce earnings by $400 million to $800 million, with an additional $600 million to $800 million impact tied to hedged cargoes, RBC added.
Upstream production could decline about 6% sequentially, although tax regimes in the Middle East may limit the overall earnings impact, the note said.
RBC said Exxon has greater regional exposure, with Qatar LNG accounting for about two-thirds of its global liquefied natural gas portfolio, thereby increasing sensitivity to disruptions.
Investors are focusing on damage to Middle East assets, including two LNG trains in Qatar, which may take three to five years to return to full operations, RBC said.
Refining margins remain a key uncertainty, with Exxon capturing only $0 to $400 million in uplift, lower than earlier expectations, the note added.
RBC set a $220 price target for Chevron based on a 10x 2027 EV/DACF multiple, while Exxon carries a $180 target using an 11x multiple, reflecting relative valuation differences, it said.
The firm maintained an Outperform rating on Chevron and a Sector Perform rating on ExxonMobil, citing differing exposure to geopolitical risks and earnings visibility, the note said.
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