Exxon and Chevron are expected to top Q3 profits as US oil production hits a record high
Exxon Mobil, a U.S.-based oil producer, and Chevron, a U.S.-based fuel company, posted higher-than-expected profits for the third quarter on Friday. This was due to soaring U.S. crude oil production, which cushioned soaring fuel prices.
Both companies focused on increasing oil and gas production, while rivals BP & Shell invested heavily in wind, solar & renewables. These investments have not yet paid off. The two U.S. firms have both benefited from the acquisition of smaller oil companies.
Despite their surging production, they could face a challenge in the near future from an uncertain demand, particularly in China, which is the world's largest oil importer, and OPEC lifting production curbs by as early as next month. It is expected that the group will delay its plan to increase production by 180,000 barrels a day due to concerns about weak demand and an oversupply.
Exxon produced a record of 4.6 million barrels equivalent per day (boepd), up by more than 24 percent from the previous year, thanks to its $60 billion investment in Pioneer Natural Resources, and purchase of Denbury.
Chevron's $53 billion takeover of Hess, which has been delayed, reported a 7% rise in third-quarter production to 3,36 million boepd. This was mainly due to gains in the U.S. Shale business, which produced a record 1,61 million boepd. It has added a drilling platform in the Permian Basin last quarter, and will start a production expansion next quarter in Kazakhstan.
Both companies have reported lower profits year-over-year due to weak global refining profit margins, which hit BP and TotalEnergies and cut their oil earnings. Exxon reported a 5% drop in profits for the third quarter compared to last year. Chevron saw a 21% decline.
Their declines, however, were less than Wall Street's expectations and not nearly as severe as those of their top European competitors. BP reported a 30% decline in profits compared to a year earlier, while TotalEnergies posted a net income drop of 37%.
LSEG data shows that Exxon's profit of $1.92 was four cents above Wall Street's expectations, while Chevron's adjusted income of $2.51 was far ahead of the analysts' $2.42 average estimate.
Chevron's shares rose 3.1% in the midday session to $153.41, while Exxon remained largely unchanged at $116.77.
Both companies produced record amounts of gas and oil from the Permian Basin, the largest shale formation in the United States. Exxon produced a record amount of oil and gas from the Permian basin which spans Texas and New Mexico.
Exxon does not plan to slow down.
Kathryn Mikells, finance chief, said: "We see enormous opportunities to invest in profitable business growth in our existing and new companies."
Chevron's output in the Permian increased by 22%, reaching a record of 950,000 boepd. This was made possible by the acquisition of PDC Energy last year. The company is now on track to achieve 1 million boepd next year.
(source: Reuters)
