Thursday was a great day for the stock market, but investors appeared to wake up Friday morning with less optimism. Some results from leaders in the technology industry that fell short of perfect had a ripple effect across the market, and although the worst damage hit the Nasdaq Composite (^IXIC 0.55%), other major market benchmarks also lost ground. As of 8:15 a.m. ET, futures on the Dow Jones Industrial Average (^DJI 0.82%) were down 171 points to 33,657. S&P 500 (^GSPC 0.59%) futures had dropped 45 points to 4,238, while Nasdaq futures had fallen 196 points to 13,259.
One of the bright spots in the stock market in 2022 has been the energy sector, where rising crude oil and natural gas prices have led to considerable improvements in business strength. On Friday morning, oil giants ExxonMobil (XOM 0.24%) and Chevron (CVX 0.84%) reported their latest financial results, and investors were quick to dissect the reports to find insight into what the prospects for energy companies could be for the remainder of the year and beyond.
Exxon takes a Russian hit
Shares of ExxonMobil were down a bit more than 1% in premarket trading Friday morning. The energy company reported strong earnings, but charges related to its Russian operations held back its profitability to a notable extent.
Rising oil prices caused ExxonMobil's revenue to soar. First-quarter sales came in at $90.5 billion, up 53% from year-ago levels. Net income doubled year over year to $5.48 billion, producing earnings of $1.28 per share.
However, the numbers would have been even better had it not been for Exxon's strategic move to exit from its Sakhalin-1 project in Russia. The company took a $3.4 billion charge in relation to that move. On an adjusted basis, earnings would have more than tripled year over year, with adjusted earnings of $2.07 per share compared to just $0.65 per share a year ago.
Interestingly, Exxon achieved these strong results even with oil-equivalent production falling from where it was three months ago. Weather-related events and planned maintenance pushed production levels down 4% to 3.7 million barrels per day, yet the upstream segment was still responsible for the vast majority of earnings. Higher prices and other factors weighed on downstream refining operations, although chemical segment earnings were relatively stable.
Investors liked that Exxon added to its stock buyback program, expecting $30 billion in repurchases through 2023. Even so, shareholders need to remember that buybacks always seem to come during boom times when the stock is at high prices.
Chevron gets a big boost
Shares of Chevron also eased lower, falling almost 1% in premarket trading. Yet the California-based oil company had its best results in years, benefiting from high energy prices.
Chevron earned $6.26 billion in the first quarter of 2022, a rise of more than 350% from the same period a year ago. That worked out to earnings of $3.22 per share. Upstream earnings nearly tripled year over year, and the company got a nice boost from its downstream operations as well, which brought in $331 million compared to barely break-even results in the first quarter of 2021.
As with Exxon, though, Chevron's production levels fell, with international production falling 170,000 barrels per day to 1.88 million barrels. That offset gains in U.S. production of 109,000 barrels to 1.18 million barrels per day. Realized prices were substantially higher than in the year-ago period, with domestic crude oil prices jumping from $48 to $77 per barrel and natural gas nearly doubling to $4.10 per thousand cubic feet.
Obviously, crude oil prices near $100 per barrel are good news for both Exxon and Chevron. It's unclear whether strong demand will persist, but even a slight reduction in price would leave the energy giants far better off than they were two years ago.