Exxon posts $9.1bn profit as oil prices recover

Houston — ExxonMobil on Friday posted a $9.1bn third-quarter profit, about a 54% drop from record earnings a year ago but up from the prior quarter as oil prices recovered.

Earnings at the largest US oil producer have benefited from higher crude oil prices compared with the previous quarter and demand for gasoline and diesel. Wall Street analysts this month trimmed the third-quarter outlook after the company pointed to weaker chemical profits and refining margins.

Results came “broadly in line” with market expectations, according to RBC analyst Biraj Borkhataria, with weaker than expected results in refining and chemicals.

Third-quarter profit was $2.25 a share, 12c below LSEG consensus of $2.37 per share. That compares with $4.68 in the same quarter a year ago when oil and gas prices climbed after Russia’s invasion of Ukraine.

Exxon’s buoyant performance has led to two all-stock deals: for shale rival Pioneer Natural Resources and for carbon pipeline operator Denbury, both struck as shares traded near an all-time record.

The latest quarter’s results benefited from global oil prices that averaged $85.92 per barrel in the quarter compared with $77.73 in the second quarter, according to LSEG data.

The results were aided by higher oil and fuel prices, but damped by Exxon’s chemical business, which was hit by higher raw materials costs. Chemical Products third-quarter earnings were $249m, down from $828m in the second quarter.

Its cash reserves continued to build, up by 10% over the second quarter’s to $33bn.

“We feel really good about our cash balance,” CFO Kathryn Mikells said in an interview. “It puts us in a good position to ultimately ensure we have the flexibility we need when eventually the commodity cycle turns against us.”

Mikells said the company is keeping its 3.7-million boepd production target for 2023. It is also on track to distribute $17.5bn in buybacks this year.

Exxon in the third quarter achieved a target to reduce its costs by year end by $9bn compared with 2019, with further savings expected by year-end.

Exxon beat a quarter earlier a $9bn year-end cost saving target versus 2019. The oil producer also placed its full-year capital expenditures at the top end of its $23bn to $25bn guidance.

The company has been selling assets around the world as it focuses on more lucrative projects in the US shale and in Guyana, and it recently put its Italy refinery up for sale.

Exxon also concluded in the third quarter the sale of a refinery in Thailand and received $900m in proceeds, raising asset sales this year to $3.1bn. Mikells did not anticipate an acceleration of asset sales after the Pioneer acquisition.

The US company will more than double its Permian production to 1.3-million oil equivalent barrels per day (boepd) after the acquisition is concluded in the first half of next year.

Higher production from Guyana and the Permian provided a partial offset to lower crude and natural gas realisations and divestments, compared with last year.

Excluding identified items, earnings declined $13.3bn to $17.2bn year to date.

Reuters