ExxonMobil and Chevron smash earnings records after surge in global oil prices

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 revenue comes 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.

“Strong second-quarter results reflect a tight global market environment, where demand has returned to near pre-pandemic levels” and supply has weakened, Exxon’s chief executive said. Darren Woods. “This situation has been aggravated by the events in Ukraine.

The blockbuster earnings came after U.K.-based Shell on Thursday reported its record second consecutive 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 reported bumper quarterly results on Friday, boosting investors after it quadrupled year-on-year in 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 .

Peter McNally, an analyst at research group Third Bridge, said the refining business was Exxon’s “star performer”, noting that its profits nearly doubled from the first quarter as the company was a “political lightning rod “.

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.

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.

As demand eased after the spike in gasoline prices, Woods said the company doesn’t “see anything that would say we’re in a recession or near a recession,” but he added that it was a “complex image”.

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 earnings.”

Exxon and Chevron responded by saying they were increasing spending on new supplies to help meet growing demand. However, their capital expenditures remain well below pre-coronavirus levels and they have prioritized increasing dividends and share buybacks.

Woods touted the company’s growth in production from the Permian Basin shale oil and gas fields in Texas and New Mexico, which he said is up 130,000 barrels of oil equivalent per year. day compared to the first half of 2021. Woods also said Exxon will increase capacity at a Beaumont, Texas, refinery by about 250,000 bpd early next year.

Chevron Chief Financial Officer Pierre Breber said in an interview that 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 gained 4.3% to $96.64 on Friday, while Chevron jumped 8.5% to $163.22.

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