Chevron (CVX) and ExxonMobil (XOM) stocks fell on Friday after both oil majors reported year-over-year profit declines for the first quarter that were impacted by lower natural gas prices and a decrease in refining margins.

ExxonMobil’s adjusted earnings of $2.06 per share fell 27% from the prior year period and came in short of analysts' estimates for $2.19 per share. Profit in the company's refining segment sank more than 60% from a year ago to $1.4 billion.

"While consensus estimates forecast a decline from profit levels a year ago, the drop was a bit more severe than anticipated," Peter McNally, global sector lead for industrials, materials, and energy at Third Bridge, said in a note on Friday.

Chevron’s first quarter adjusted profit came in at $2.93 per share, beating estimates for $2.90 but still down roughly 17% from the same period last year. The company attributed the profit decline to "lower margins on refined product sales and lower natural gas realizations."

Exxon stock was down 4%, while Chevron's declined roughly 1% in mid-morning trading.

Natural gas prices plummeted this past year, down roughly 34% year to date.

But oil majors could benefit from rising oil prices in coming quarters. Crude prices were slightly higher in the first quarter of this year compared to last year. The biggest price action came in mid-March when West Texas Intermediate prices broke out above $80 amid rising geopolitical tensions.

Most Wall Street analysts expect oil to stay above the $80 level for the time being, creating a tailwind for energy companies.

For the second quarter of 2024, analysts are projecting earnings growth of 14.6% for the energy sector, according to FactSet data.

Aside from quarterly results, investors had been looking for updates on the oil majors' prospective acquisitions, including Exxon's dispute over the Chevron-Hess (HES) deal.

During the earnings call, ExxonMobil's CEO reiterated the oil giant's reason for filing for arbitration over Chevron’s plan to buy Hess and its most valuable asset, a 30% stake in a prolific block off the coast of Guyana. ExxonMobil holds a 45% interest in the oil-rich area.

"We filed for arbitration to confirm our rights and establish the value that the Chevron-Hess transaction places on the Guyana asset," said Woods. "Any responsible management team would do the same."

Guyana has proven to be a lucrative asset. ExxonMobil posted higher-than-expected production in the region. On Thursday, Hess posted better-than-expected first quarter results thanks to a 70% bump in production in the region.

Chevron’s $53 billion proposal to buy Hess came more than a week after ExxonMobil said it intended to buy Pioneer Natural Resources (PXD) for almost $60 billion last year.

The acquisition is expected to close by the end of the second quarter, pending regulatory approval. The merger would allow ExxonMobil to double its footprint in the Permian Basin, the largest oil-producing region in the US.

Exxon said it distributed $3.8 billion in dividends last quarter. The company said its annual pace of share repurchases, which were paused pending the merger, will increase to $20 billion per year after the transaction closes.

Chevron said it repurchased $3 billion in shares last quarter, and distributed another $3 billion in dividends.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.

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