ExxonMobil and Chevron smash earnings records after global oil price spike
ExxonMobil and Chevron broke second-quarter profit records as the spike in energy prices following Russia’s invasion of Ukraine was a boon for the US oil supermajors.
The huge gains come as consumers reel from sky-high fuel costs that have helped drive inflation to levels not seen in decades in the United States and Europe, threatening a political backlash against energy companies .
Exxon’s second-quarter net profit was $17.9 billion, beating analysts’ estimates of $16.9 billion, according to data compiled by S&P Capital IQ. The company’s previous record quarterly profit was $15.9 billion in 2012, another year of high oil prices.
Chevron’s second-quarter profit was $11.6 billion, also its highest quarterly profit and easily beating consensus estimates of $9.9 billion.
“Earnings and cash flow benefited from increased production, higher realizations and tight cost control,” said Darren Woods, chief executive of Exxon.
The blockbuster earnings came after U.K.-based Shell on Thursday reported its record second straight quarter with adjusted profit of $11.5 billion. French company TotalEnergies said the same day that profits for the quarter jumped to $9.8 billion, almost triple the same period a year ago.
The five Western oil supermajors – Exxon, Chevron, Shell, BP and TotalEnergies – are together on track to generate well over $50 billion in profits in the three months to the end of June.
Italian rival Eni also announced exceptional quarterly results on Friday, boosting investors after quadrupling year-on-year its adjusted net profit to 3.81 billion euros.
The ‘downstream’ oil refining businesses of Exxon and Chevron propelled their results soaring after profit margins from selling refined fuels above the cost of buying crude oil soared to record highs .
In the United States, the national average gasoline price hit a record high of more than $5 a gallon in June, although it has since fallen.
Big Oil’s financial windfall has sparked attacks from politicians and sparked growing calls for a windfall tax on profits, which companies face in the UK and elsewhere. Last month, US President Joe Biden said Exxon was making “more money than God” and promised to “make sure everyone knows about Exxon’s profits”.
Exxon and Chevron responded by saying they were increasing spending on new supplies to help meet growing demand. However, their capital spending remains well below pre-pandemic levels and they have prioritized increasing dividends and share buybacks.
Woods touted the company’s production growth in the U.S. Permian shale oil and gas fields in Texas and New Mexico, which Exxon said is up 130,000 barrels of oil equivalent per day. compared to the first half of 2021.
Pierre Breber, chief financial officer of Chevron, said he expects the company to increase spending next year as the company responds to increased demand.
“Our budget this year is about $15 billion and our forecast through 2026 is $15-17 billion a year, which gives us $2 billion of headroom. . . you should see higher capital from us in 2023,” he said, pointing to the Permian as an area likely to have increased production.
Exxon’s quarterly revenue rose 71% year-over-year to $115.7 billion, while Chevron’s rose more than 80% to $68.8 billion. Shares of Exxon jumped 3.5% to $95.89 early Friday, while Chevron gained 7.1% to hit $161.04.
The outlook for the oil majors has darkened in recent weeks as central banks around the world rapidly raise interest rates to fight inflation, largely due to the effects of soaring energy prices, raising fears of a global economic slowdown.
Widening economic fears sparked a strong sell-off in oil and gas stocks, even amid expectations of bumper earnings, although their prices remained up on the year and outperformed the market.