Oil majors expect higher Q3 earnings

Upcoming quarterly earnings from major oil and refining companies will likely fall below Wall Street expectations, but should come in higher than last year, according to analysts with Barclays Capital.

For the third quarter, a group of 19 major integrated oil and refining companies based in the Americas should earn a total of $41.1 billion, down from last quarter but up 32 percent from the July-September period in 2010, the investment bank predicts.

While lower crude prices during the quarter will shave production profits, the cheaper raw material is expected to improve refining margins.

Chevron Corp., the nation’s second-largest oil company after Exxon Mobil Corp., gave similar guidance in an interim update report this week.

The San Ramon, Calif-based oil giant said earnings should be similar to its second-quarter results despite weaker profits for its oil and exploration business, which was hurt by a decrease in crude realizations and lower liftings. Its refining and marketing arm should post higher profits, partly due to asset sales, while both segments are expected to benefit from a stronger U.S. dollar.

Chevron will be among the major oil companies reporting quarterly earnings next week, along with BP, ConocoPhillips, Royal Dutch Shell and Exxon Mobil.

Analysts with Tudor, Pickering, Holt & Co., a Houston investment bank, said investors should not expect major surprises in third-quarter reports from large or small oil and gas exploration and production companies.

“Overall Q3 is expected to be ho-hum for the group and we don’t see many big beats or misses,” they said in a morning note.

Exxon Mobil’s second-quarter profits were the highest since the third quarter of 2008, when it hit a corporate earnings record of $14.8 billion. Other major oil companies, including Shell and Chevron, also posted gains on higher oil prices in the quarter.