EXXON Mobil beat Wall Street’s third-quarter profit estimate on Friday (Nov 1), boosted by strong oil output in its first full quarter that includes volumes from US shale producer Pioneer Natural Resources.
Oil industry earnings have been squeezed this year by slowing demand and weak margins on petrol and diesel. But Exxon’s year-over-year profit fell 5 per cent, a much smaller drop than at rivals BP and TotalEnergies, which posted sharply lower quarterly results.
The US oil producer reported income of about US$8.6 billion, down from about US$9.1 billion a year ago. Its US$1.92 a share profit topped Wall Street’s outlook of US$1.88 per share, on higher oil and gas production and spending constraints.
“We had a number of production records” in the quarter, said finance chief Kathryn Mikells, citing an about 25 per cent year-on-year increase in oil and gas output, to 4.6 million barrels a day.
Exxon shares rose about 1.9 per cent in pre-market trading to US$119 per share.
Exxon earlier this month had flagged operating profit likely fell, leading Wall Street analysts to shave their quarterly per-share earnings outlook by nearly US$0.10.
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The results included Exxon’s first full quarter of production following its acquisition in May of Pioneer Natural Resources. The US$60 billion deal drove production in the top US shale basin to nearly 1.4 million barrels per day of oil and gas, helping overcome a 17 per cent decline in average oil prices in the quarter ended Sep 30.
Exxon disclosed it raised its quarterly dividend by 4 per cent after generating free cash flow of US$11.3 billion, well above analysts’ estimates.
Rivals Saudi Aramco and Chevron have had to borrow this year to cover shareholder returns after boosting dividends and buybacks to attract investors.
Exxon did not provide a fourth quarter outlook, but said it plans to provide investors with a revised production forecast next month.
The Organisation of the Petroleum Exporting Countries in December may add 180,000 barrels a day of additional supply to a market with an uncertain demand outlook.
The market is worried about oil supply outrunning demand. Prices slumped over the summer and remain about 12 per cent below June’s average.
Exxon’s earnings from producing petrol and diesel were US$1.3 billion, down from US$2.44 billion in the same quarter a year ago as weak margins and a refinery outage pummelled fuel results.
An Illinois refinery went offline for nearly a month during the quarter, a shutdown that analysts estimate hit operating profits by about US$250 million.
“Refining margins definitely came down in the quarter. If you look at overall results for the refining business, we feel pretty good,” said Exxon’s Mikells.
Per unit refining margins since 2019 have about doubled on a constant margin basis, she added.
Profits from Exxon’s chemical business, which has been pressured by industry overcapacity for two years, rose in the quarter to US$893 million, compared to US$249 million a year ago, on a slight increase in margins.
“We are in a much better position (in chemicals) because we have a strong Gulf Coast footprint that benefits from Gulf Coast (natural gas) prices,” said chief financial officer Mikells. REUTERS
