Exxon Just Lowered Its Earnings Guidance. Why the Stock Is Rising.

Exxon Mobil warned that lower energy prices would affect the bottom line. (Dreamstime)

Shares of Exxon Mobil, the biggest U.S. energy company, were rising in early trading even after it flagged that second-quarter earnings will take a hit from lower energy prices.

Exxon is a big oil company, so what oil prices do matter for the bottom line. With WTI crude, the U.S. benchmark, down 5.2% this year, Exxon warned that earnings in its upstream unit—the one that extracts oil and gas from the ground—will get reduced by between $800 million and $1.2 billion. Weaker gas prices will cut as much as $700 million from the bottom line, though some of those losses could be offset by better margins for other energy products, the company said in a securities filing on Monday.

Exxon stock, however, is up 2.4% on Tuesday, suggestingn that investors already knew that crude prices, which had fallen substantially between April and July, were already reflected in the price. It follows a notice from London-based Shell that trading profits will be lower than thought.

Other oil stocks weree getting a lift as well. Chevron rose 2.8%, while Shell’s American depositary receipts gained 01.5%, while BP ADRs added 3.1%.

West Texas Intermediate, the U.S. benchmark, advanced 0.2% to $68.09 a barrel. The price is down 17% over the past year. Brent crude, the international standard, rose 0.4% to $69.84.

Separately, BP said Tuesday that it has signed new agreements to develop oil facilities in Libya, returning to the country more than a decade after leaving when it fell into civil war.

It is still a few weeks before oil companies report their earnings for the second quarter. Exxon’s results are due on Aug. 1.

Write to Brian Swint at brian.swint@barrons.com