By Reuters
Chevron Corporationon Friday reported its second-highest ever quarterly profit, blasting past analysts’ estimates, driven by soaring global demand for its oil and gas and rising production from its U.S. oilfields.
Chevron posted a third-quarter net profit of $11.2 billion, or $5.78 per share – almost double the $6.1 billion from the same period last year, and well ahead of Wall Street’s $4.86 estimate.
U.S. oil executives have been loath to crow about this year’s earnings gains – surpassing the once-sizzling tech sector – preferring to emphasize investment commitments. But soaring profits are feeding criticism in the United States and Europe as inflation climbs.
The company’s cash flow from operations soared to a record $15.3 billion, far higher than the previous quarter. Chevron’s return on capital employed – a measure of how much it earns from each dollar invested in the business – jumped to 25%.
Output from the U.S. Permian basin topped 700,000 barrels of oil equivalent per day (boed), up 12% from a year ago and above the second quarter’s 692,000 boed. But global production in the first nine months of the year is down by about 100,000 boed from the 3.093 million boed from the same period last year.
Chevron reaffirmed its goal of pumping 1 million bpd in the top U.S. shale oil field in 2025, and achieve a 3% annual growth rate compounded between 2023-2026 for its overall output.
CFO Breber said Chevron will increase project spending by 20% next year, to up to $17 billion. This year’s spending will be less than $15 billion excluding acquisitions, Breber said.
Chevron has pledged to put profits into raising shareholder dividends, into fossil fuel and clean energy projects, and to cut debt.
“Our fourth priority, after we have met the first three, is to do share buybacks” at $15 billion a year, Breber said.
Its oil and gas business posted an operating profit that surged 81% to $9.3 billion, while its oil refining business nearly doubled to $2.5 billion.
Still, profit from refining cooled from the second quarter, keeping overall earnings below the company’s all-time record of $11.6 billion. Refineries processed about 13% fewer barrels per day from the year-ago period, primarily due to planned maintenance, the company said.
However, refined product sales of 1.25 million barrels per day were up 5% from the year-ago period, mainly due to higher renewable fuel sales following its acquisition of biodiesel supplier Renewable Energy Group.
Exxon’s record-smashing Q3 profit nearly matches Apple’s
ExxonMobil Corp on Friday smashed expectations as soaring energy prices fueled a record-breaking quarterly profit, nearly matching that of tech giant Apple.
Its $19.66 billion third-quarter net profit far exceeded recently raised Wall Street forecasts as skyrocketing natural gas and high oil prices put its earnings within reach of Apple’s $20.7 billion net for the same period.
As recently as 2013, Exxon ranked as the largest publicly traded U.S. company by market value – a position now held by Apple. Exxon shares jumped 2% in premarket trading to $109.80, a new record high.
Oil company profits have soared this year as rising demand and an undersupplied energy market collided with Western sanctions against Russia over its invasion of Ukraine. U.S. exports of gas and oil to Europe have jumped and promise to set all-time profit records for the industry.
The top U.S. oil producer reported a per-share profit of $4.68, exceeding Wall Street’s $3.89 consensus view, on a huge jump in natural gas earnings, continued high oil prices and strong fuel sales.
“Where others pulled back in the face of uncertainty and a historic slowdown, retreating and retrenching, this company moved forward, continuing to invest,” Chief Executive Darren Woods told investors. Its quarterly profits “reflect that deep commitment” as well as higher prices, he added.
Exxon led record gains among oil majors in the second quarter and has leapfrogged Shell Plc (SHEL.L) and TotalEnergies SE (TTEF.PA) with earnings almost twice as big from continued bets on fossil fuels as competitors shifted investment to renewables.
Exxon banked $43 billion in the first nine months of this year, 19% more than in the same period of 2008, when oil prices traded at a record level of $140 per barrel.
Earnings from pumping oil and gas tripled last quarter while profit from selling motor fuels jumped tenfold compared with year-ago levels. Natural gas sales to Europe and soaring demand for diesel fuel led the company’s better-than-expected results.
“The refining businesses – both in the U.S. and international – was the star performer,” said Peter McNally, an analyst at Third Bridge.
Those rising fuel profits have renewed calls by U.S. President Joe Biden for companies to invest the windfall from this year’s energy price run-up in production rather than buy back their own shares.
Exxon will maintain its $30 billion share buyback through 2023 while increasing dividends, Chief Financial Officer Kathryn Mikells told Reuters. On Friday, it declared a fourth-quarter per-share dividend of 91 cents, up 3 cents, and will pay $15 billion to shareholders this year.
Exxon said its U.S. oil and gas production from the Permian Basin was near 560,000 barrels of oil and gas per day (boed), a record. Production for the year will increase about 20% over 2021, said CEO Woods.
“We’re optimizing and adjusting our development plans,” he told analysts, with the full-year production gain below the 25% increase Exxon had forecast in February.
Results also were helped by an almost 100,000-boed increase over the previous quarter in Guyana, where Exxon leads a consortium responsible for all output in the South American nation.
But its withdrawal from Russia reduced its overall production forecast for the year by about 100,000 barrels per day. Exxon said its Russian assets were expropriated.
“We are going to end up at about 3.7 million barrels a day for the full year,” Mikells said, down from a 3.8 million goal set in February. Reuters