Exxon, Chevron profits soar on natural gas export surge
EXXON Mobil and Chevron amassed more than US$30 billion in combined net income as politicians blast Big Oil for raking in massive profits at a time when consumers are struggling with soaring inflation and energy shortages worldwide.
Big Oil refers to the world’s six or seven largest publicly traded and investor-owned oil and gas companies.
Exxon posted the highest profit in its 152-year history, while Chevron announced its second-best quarterly result as natural gas demand and prices surged. Those earnings follow strong results posted by European peers Shell and TotalEnergies earlier this week.
Even as the super majors bask in profits unimagined just two years ago during the darkest days of the pandemic, oil executives are under pressure by government leaders to ease prices at the pump for consumers and cut global-warming emissions.
Meanwhile, shareholders have been demanding higher returns and an end to costly exploration programmes, adding to commodity-price pressures.
The strength of the American oil industry’s earnings come in stark contrast to tech giants that supplanted them atop of the S&P 500 Index for much of the past decade. Commodities produced from wells, refineries and chemical plants are not only more resilient to inflation and recession than the ad-based revenues of Alphabet and Snap, but also produce real-world earnings.
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For Exxon, third-quarter per-share profit of US$4.68 exceeded US$3.89 median estimate from analysts in a Bloomberg survey. Net income of US$19.7 billion surpassed the all-time high of US$17.6 billion amassed during the second quarter.
Exxon bucked the trend of weaker refining earnings, benefiting from record crude-processing in North America and high diesel demand. In Europe, a continent-wide scramble to stash natural gas ahead of winter swelled the prices Exxon received for the fuel by 22%, more than offsetting the pain from a 12% drop in what the company fetched for crude.
The explorer also lifted output in key oil zones such as the Permian Basin and Guyana, where combined production reached the equivalent of 920,000 barrels a day during the quarter.
Expectations among analysts rose after Exxon’s Oct 4 trading statement said that robust natural gas prices more than offset a dip in crude markets. The strong earnings streak is expected to continue through the current quarter; Exxon is forecast to post full-year profit in excess of US$50 billion – more than Amazon.com, Procter & Gamble, and Tesla combined.
Meanwhile, Chevron’s third-quarter earnings of US$5.56 per share surpassed the median US$4.94 forecast among analysts in the Bloomberg Consensus. Net income was US$11.2 billion, down slightly from the all-time high of more than US$12 billion in the prior three months, according to a company statement on Friday.
“We delivered another quarter of strong financial performance with return on capital employed of 25 per cent,” chief executive officer Mike Wirth said in the statement. “At the same time, we’re increasing investments and growing energy supplies, with our Permian production reaching another quarterly record.” BLOOMBERG
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