Exxon, Chevron Q1 Earnings Expected to Dip

Exxon Mobil and Chevron are expected to report lower quarterly earnings per share when compared with last year's first quarter, though their stocks have outperformed smaller companies with both in the midst of aggressive expansion plans in shale oil.

A combination of lower oil prices, weakness in liquefied natural gas (LNG) portfolios and lackluster refinery margins could hurt integrated oil companies across the board, analysts said ahead of results announcements on Friday.

"We're not looking for a great first quarter for the group," said Blake Fernandez, senior research analyst with Piper Jaffray & Co's Simmons Energy.

Still, shares of both companies have performed well in recent months amid extensive efforts to boost investment in the Permian region of west Texas and New Mexico, where heavy production has driven U.S. crude output to an all-time record of more than 12 million barrels per day.

Shares of Exxon Mobil Corp have rallied about 20 percent since the start of the year, while Chevron Corp stock has risen roughly 10 percent.

Exxon, the world's largest publicly traded oil producer, is expected to earn 69 cents a share, down from $1.09 a year ago. Revenues are expected to come in at $64.8 billion, down 5 percent from a year ago, according to Refinitiv Eikon estimates.

Chevron is forecast to earn $1.30 a share, down from $1.90 a year ago, even as revenue is expected to rise by 1.7 percent to $38.4 billion, Refinitiv data shows.

Weakness in the sector's shipping and chemical businesses could weigh on results in coming quarters, as those units "could become more challenging in 2019," J.P. Morgan said in a note on Exxon this month. The bank has a neutral rating on Exxon.

Exxon's fourth-quarter Permian oil and gas output was 300,000 bpd; it plans to boost that to more than 1 million bpd by 2024, it said last month.

Chevron has bid $33 billion to take over Anadarko Petroleum (APC) to expand its reach. On Wednesday, rival Occidental bid $38 billion on Anadarko, kicking off the first takeover battle for an oil company in years.

U.S. oil prices are up more than 40 percent since late last year and refinery margins have improved, which could help position the majors for better results ahead, said Fernandez of Piper Jaffray & Co's Simmons Energy.

"If you get some weak results, shares might trade weaker on that day, but I think investors are largely going to be able to brush that off," Fernandez said.

(Reporting by Laila Kearney; editing by Grant McCool)