Released November 03, 2023 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Third-quarter earnings slumped for three large international integrated supermajor oil firms, Exxon Mobil Corporation (NYSE:XOM) (Spring, Texas), Chevron Corporation (NYSE:CVX) (San Ramon, California) and BP plc (NYSE:BP) (London, England). But Shell plc (NYSE:SHEL) (London, England) increased third-quarter profits, partly because the prices and margins for its oil, natural gas and chemicals increased, while peers experienced declining or flat prices.
Brent crude oil spot prices averaged about $87 per barrel for the just-completed quarter, down from about $101 for the July-September 2022 average price.
ExxonMobil announced and closed a strategic acquisition of low-carbon player Denbury Incorporated (NYSE:DEN) during the third quarter, bolstering its low-carbon business. Chevron closed its acquisition of PDC Energy Incorporated (Denver, Colorado) during the just-competed period; that transaction was announced earlier this year, in the second quarter.
After the third quarter, ExxonMobil and Chevron announced blockbuster acquisitions of smaller oil and gas companies: ExxonMobil will buy Pioneer Natural Resources (NYSE:PXD) (Irving, Texas), while Chevron will acquire Hess Corporation (NYSE:HES) (New York, New York). Company stock was used to fund both transactions. For more on those transactions, see October 12, 2023, article - It's Official: ExxonMobil to Acquire Pioneer Natural Resources for $59.5 Billion, and October 24, 2023, article - Chevron to Buy Hess, Add Bakken Shale to Oil & Gas Holdings.
Investors didn't care for either transaction, sending the stock price of the acquiring companies downward despite management's explanation of the strategic benefits of each deal. Investors appear to believe oil prices are more likely to head down, not up, and demand may slacken as economies around the world slow. The Exxon and Chevron deals came when oil prices were relatively high, although off their recent peaks. Investors have tended to be more supportive for transactions that took place when commodity prices were low.
Click on the image at right to see three years of third-quarter earnings for all four supermajors.
During the third quarter, BP unexpectedly lost its chief executive, Bernard Looney, who resigned over past relationships with colleagues. Shell, on the other hand, early in the fourth quarter announced it would trim its low-carbon business in early 2024 after failing to secure a slice of DOE $7 billion hydrogen hub funding for its Louisiana project.
Third-quarter results for the four companies are summarized below.
ExxonMobil
Compared to year-earlier results, third-quarter profits fell across the board for America's largest oil and gas company. Upstream earnings declined to $6.1 billion from $12.4 billion in the comparable year-earlier period. Downstream earnings, including refining, chemicals and specialty chemicals, fell to approximately $3.3 billion from $7.1 billion.
Click the image at right to see a chart of upstream earnings for all four supermajors for Q3 2023 and Q3 2022.
In announcing earnings October 27, Chairman and CEO Darren Woods said the Denbury and Pioneer acquisitions "further underscore our ongoing commitment to the 'and' equation by continuing to meet the world's needs for energy and essential products while reducing emissions. Pioneer will help us grow supply to meet the world's energy needs with lower carbon intensity, while Denbury improves our competitive position to economically reduce emissions in hard-to-decarbonize industries."
"Our disciplined operational and financial performance, combined with these strategic transactions, will strengthen our portfolio and position us to deliver profitable growth and attractive returns for many years to come."
Excluding asset divestments and the resources of the Denbury and Pioneer acquisitions, Exxon increased oil-equivalent production by about 80,000 barrels per day when compared with the third quarter of 2022, the company reported. Refinery throughput rose while carbon dioxide (CO2) emissions intensity fell in the just-completed period, Woods said.
Industrial Info is tracking approximately 341 capital and maintenance projects around the world involving ExxonMobil, valued at about $73.9 billion. The countries with the highest dollar value of project activity are the U.S. ($23.4 billion), Mozambique ($20 billion), Guyana ($8.7 billion), Vietnam ($8.5 billion) and China ($5.1 billion). By industry, project activity is concentrated in the Oil and Gas Production ($46 billion) segment followed by Chemical Processing ($12.8 billion), Power ($6.7 billion) and Petroleum Refining ($4.2 billion).
Chevron
The company completed its acquisition of gas driller PDC Energy during the third quarter. That acquisition boosted Chevron's acreage in Colorado's Denver-Julesburg (D-J) Basin by about 275,000 net acres. That newly acquired acreage is projected to contain up to 1 billion of proved oil equivalent reserves. In acquiring PDC Energy, Chevron also gained substantial acreage in the Permian Basin in West Texas and Eastern New Mexico, an area where it has sought to expand its operations.
Chevron reported earnings on October 27. Overall profits fell to $6.5 billion from $11.2 billion in the comparable year-earlier quarter. Upstream earnings declined to $5.8 billion from $9.3 billion, while downstream earnings fell to about $1.7 billion from $2.5 billion in the year-earlier quarter.
Click the image at right to see a chart of downstream earnings for all four supermajors for Q3 2023 and Q3 2022.
Mike Wirth, Chevron's chairman and chief executive, said the acquisition of PDC Energy "has strengthened our position in important U.S. production basins." The D-J Basin now ranks among Chevron's five top-producing assets.
He also touted the company's acquisition of a majority stake in ACES Delta LLC, a large green hydrogen production and storage hub.
"Chevron is delivering strong financial results, while also investing to profitably grow our traditional and new energy businesses to drive superior value for shareholders," he said. "We delivered another quarter of solid financial results and strong cash returns to shareholders," adding that the company has returned about $20 billion in cash to shareholders so far in 2023, which is approximately 27% higher than last year's record total for the same period.
Globally, Chevron is involved with about 219 capital and maintenance projects, which have a total investment value (TIV) of about $30.6 billion, according to IIR's Global Market Intelligence (GMI) platform. The countries with the highest dollar value of project activity are the U.S. ($18.2 billion), Kazakhstan ($5.1 billion), Israel ($2 billion), Angola ($1.8 billion) and Australia ($1.4 billion). By industry, this project activity is concentrated in Oil and Gas Production ($16.4 billion) and Chemical Processing ($9.1 billion), with much smaller levels of spending in Metals & Minerals ($1 billion), Petroleum Refining ($963 million), Alternative Fuels, ($959 million), Oil and Gas Pipelines ($918 million), Electric Power ($630 million) and Terminals ($606 million).
BP
Quarterly profits declined for this London-based supermajor, falling to about $3.3 billion compared to $8.1 billion for the July-September 2022 period.
In the company's upstream segment, third-quarter earnings before interest and taxes fell to about $4.4 billion compared to profits of about $11.5 billion before interest and taxes for the comparable year-earlier quarter. Downstream earnings before interest and taxes fell to about $2.1 billion from $2.7 billion for the comparable year-earlier period.
In an October 31 comment on earnings, Interim CEO Murray Auchincloss said: "This has been a solid quarter supported by strong underlying operational performance demonstrating our continued focus on delivery. Momentum continues to build across our businesses. ... We remain committed to executing our strategy, expect to grow earnings through this decade and (are) on track to deliver strong returns for our shareholders."
Industrial Info is tracking about 393 capital and maintenance projects around the world involving BP, valued at about $47.2 billion. The countries with the greatest dollar value of project activity are the U.S. ($9.3 billion), Australia ($6.2 billion), Azerbaijan ($5.9 billion), Oman ($5.1 billion) and the U.K. ($4.3 billion). BP's project activity is concentrated in these industries: Oil and Gas Production ($14.9 billion), Electric Power ($11.8 billion), Chemical Processing ($11.5 billion) and Petroleum Refining ($4.4 billion).
Shell
Shell broke with its peers on the trend of its earnings, which increased to $7 billion for the just completed quarter, up from $6.7 billion in the comparable year-earlier period. Some of the improvement stemmed from better selling prices for its oil and natural gas: Shell realized about $71 per barrel for its oil and about $7.50 per million cubic feet (Mcf) for its natural gas; both prices were flat to slightly higher than second-quarter 2023 results. Margins for refined product and chemicals rose in the just-completed quarter over year-earlier results.
Overall production on a barrels of oil equivalent (boe) basis fell slightly for the just-completed period from the previous quarter of 2023: third-quarter production was about 2.6 million boe/d, down from 2.7 million boe/d in the second quarter.
The company, which reported earnings on November 2, also said it lost $67 million in its renewable-energy business, down from a profit of $383 million in the comparable year-earlier quarter.
In its earnings release, Shell said it would buy back about $3.5 billion of its shares by the time it announces fourth-quarter 2023 earnings, expected to be in late January or early February. That would bring total second-half 2023 buybacks to $6.5 billion, about $1.5 billion more than was projected at a meeting company officials had with analysts in June. With the fourth-quarter share repurchases, full-year shareholder distributions are estimated at about $23 billion.
Speaking to investors on November 2, Chief Financial Officer Sinead Gorman said Shell is delivering "more value with less emissions, guided by our principles of performance, discipline and simplification."
"Shell delivered another quarter of strong operational and financial performance, capturing opportunities in volatile commodity markets," said Shell Chief Executive Officer Wael Sawan in announcing earnings.
Investors agreed, bidding up shares of Shell about 4% on November 2.
Globally, Shell is involved with about 885 capital and maintenance projects, which have a total investment value (TIV) of about $142.7 billion, according to IIR's Global Market Intelligence (GMI) platform. Geographically, these projects are concentrated in Canada ($30.6 billion), Brazil ($28.9 billion), the U.K. ($26.6 billion) and the U.S. ($23 billion). By industry, these projects are clustered in Electric Power ($67.7 billion), Oil and Gas Production ($50.3 billion) and Chemical Processing ($15.1 billion).
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
Brent crude oil spot prices averaged about $87 per barrel for the just-completed quarter, down from about $101 for the July-September 2022 average price.
ExxonMobil announced and closed a strategic acquisition of low-carbon player Denbury Incorporated (NYSE:DEN) during the third quarter, bolstering its low-carbon business. Chevron closed its acquisition of PDC Energy Incorporated (Denver, Colorado) during the just-competed period; that transaction was announced earlier this year, in the second quarter.
After the third quarter, ExxonMobil and Chevron announced blockbuster acquisitions of smaller oil and gas companies: ExxonMobil will buy Pioneer Natural Resources (NYSE:PXD) (Irving, Texas), while Chevron will acquire Hess Corporation (NYSE:HES) (New York, New York). Company stock was used to fund both transactions. For more on those transactions, see October 12, 2023, article - It's Official: ExxonMobil to Acquire Pioneer Natural Resources for $59.5 Billion, and October 24, 2023, article - Chevron to Buy Hess, Add Bakken Shale to Oil & Gas Holdings.
Investors didn't care for either transaction, sending the stock price of the acquiring companies downward despite management's explanation of the strategic benefits of each deal. Investors appear to believe oil prices are more likely to head down, not up, and demand may slacken as economies around the world slow. The Exxon and Chevron deals came when oil prices were relatively high, although off their recent peaks. Investors have tended to be more supportive for transactions that took place when commodity prices were low.
Click on the image at right to see three years of third-quarter earnings for all four supermajors.During the third quarter, BP unexpectedly lost its chief executive, Bernard Looney, who resigned over past relationships with colleagues. Shell, on the other hand, early in the fourth quarter announced it would trim its low-carbon business in early 2024 after failing to secure a slice of DOE $7 billion hydrogen hub funding for its Louisiana project.
Third-quarter results for the four companies are summarized below.
ExxonMobil
Compared to year-earlier results, third-quarter profits fell across the board for America's largest oil and gas company. Upstream earnings declined to $6.1 billion from $12.4 billion in the comparable year-earlier period. Downstream earnings, including refining, chemicals and specialty chemicals, fell to approximately $3.3 billion from $7.1 billion.
Click the image at right to see a chart of upstream earnings for all four supermajors for Q3 2023 and Q3 2022.In announcing earnings October 27, Chairman and CEO Darren Woods said the Denbury and Pioneer acquisitions "further underscore our ongoing commitment to the 'and' equation by continuing to meet the world's needs for energy and essential products while reducing emissions. Pioneer will help us grow supply to meet the world's energy needs with lower carbon intensity, while Denbury improves our competitive position to economically reduce emissions in hard-to-decarbonize industries."
"Our disciplined operational and financial performance, combined with these strategic transactions, will strengthen our portfolio and position us to deliver profitable growth and attractive returns for many years to come."
Excluding asset divestments and the resources of the Denbury and Pioneer acquisitions, Exxon increased oil-equivalent production by about 80,000 barrels per day when compared with the third quarter of 2022, the company reported. Refinery throughput rose while carbon dioxide (CO2) emissions intensity fell in the just-completed period, Woods said.
Industrial Info is tracking approximately 341 capital and maintenance projects around the world involving ExxonMobil, valued at about $73.9 billion. The countries with the highest dollar value of project activity are the U.S. ($23.4 billion), Mozambique ($20 billion), Guyana ($8.7 billion), Vietnam ($8.5 billion) and China ($5.1 billion). By industry, project activity is concentrated in the Oil and Gas Production ($46 billion) segment followed by Chemical Processing ($12.8 billion), Power ($6.7 billion) and Petroleum Refining ($4.2 billion).
Chevron
The company completed its acquisition of gas driller PDC Energy during the third quarter. That acquisition boosted Chevron's acreage in Colorado's Denver-Julesburg (D-J) Basin by about 275,000 net acres. That newly acquired acreage is projected to contain up to 1 billion of proved oil equivalent reserves. In acquiring PDC Energy, Chevron also gained substantial acreage in the Permian Basin in West Texas and Eastern New Mexico, an area where it has sought to expand its operations.
Chevron reported earnings on October 27. Overall profits fell to $6.5 billion from $11.2 billion in the comparable year-earlier quarter. Upstream earnings declined to $5.8 billion from $9.3 billion, while downstream earnings fell to about $1.7 billion from $2.5 billion in the year-earlier quarter.
Click the image at right to see a chart of downstream earnings for all four supermajors for Q3 2023 and Q3 2022.Mike Wirth, Chevron's chairman and chief executive, said the acquisition of PDC Energy "has strengthened our position in important U.S. production basins." The D-J Basin now ranks among Chevron's five top-producing assets.
He also touted the company's acquisition of a majority stake in ACES Delta LLC, a large green hydrogen production and storage hub.
"Chevron is delivering strong financial results, while also investing to profitably grow our traditional and new energy businesses to drive superior value for shareholders," he said. "We delivered another quarter of solid financial results and strong cash returns to shareholders," adding that the company has returned about $20 billion in cash to shareholders so far in 2023, which is approximately 27% higher than last year's record total for the same period.
Globally, Chevron is involved with about 219 capital and maintenance projects, which have a total investment value (TIV) of about $30.6 billion, according to IIR's Global Market Intelligence (GMI) platform. The countries with the highest dollar value of project activity are the U.S. ($18.2 billion), Kazakhstan ($5.1 billion), Israel ($2 billion), Angola ($1.8 billion) and Australia ($1.4 billion). By industry, this project activity is concentrated in Oil and Gas Production ($16.4 billion) and Chemical Processing ($9.1 billion), with much smaller levels of spending in Metals & Minerals ($1 billion), Petroleum Refining ($963 million), Alternative Fuels, ($959 million), Oil and Gas Pipelines ($918 million), Electric Power ($630 million) and Terminals ($606 million).
BP
Quarterly profits declined for this London-based supermajor, falling to about $3.3 billion compared to $8.1 billion for the July-September 2022 period.
In the company's upstream segment, third-quarter earnings before interest and taxes fell to about $4.4 billion compared to profits of about $11.5 billion before interest and taxes for the comparable year-earlier quarter. Downstream earnings before interest and taxes fell to about $2.1 billion from $2.7 billion for the comparable year-earlier period.
In an October 31 comment on earnings, Interim CEO Murray Auchincloss said: "This has been a solid quarter supported by strong underlying operational performance demonstrating our continued focus on delivery. Momentum continues to build across our businesses. ... We remain committed to executing our strategy, expect to grow earnings through this decade and (are) on track to deliver strong returns for our shareholders."
Industrial Info is tracking about 393 capital and maintenance projects around the world involving BP, valued at about $47.2 billion. The countries with the greatest dollar value of project activity are the U.S. ($9.3 billion), Australia ($6.2 billion), Azerbaijan ($5.9 billion), Oman ($5.1 billion) and the U.K. ($4.3 billion). BP's project activity is concentrated in these industries: Oil and Gas Production ($14.9 billion), Electric Power ($11.8 billion), Chemical Processing ($11.5 billion) and Petroleum Refining ($4.4 billion).
Shell
Shell broke with its peers on the trend of its earnings, which increased to $7 billion for the just completed quarter, up from $6.7 billion in the comparable year-earlier period. Some of the improvement stemmed from better selling prices for its oil and natural gas: Shell realized about $71 per barrel for its oil and about $7.50 per million cubic feet (Mcf) for its natural gas; both prices were flat to slightly higher than second-quarter 2023 results. Margins for refined product and chemicals rose in the just-completed quarter over year-earlier results.
Overall production on a barrels of oil equivalent (boe) basis fell slightly for the just-completed period from the previous quarter of 2023: third-quarter production was about 2.6 million boe/d, down from 2.7 million boe/d in the second quarter.
The company, which reported earnings on November 2, also said it lost $67 million in its renewable-energy business, down from a profit of $383 million in the comparable year-earlier quarter.
In its earnings release, Shell said it would buy back about $3.5 billion of its shares by the time it announces fourth-quarter 2023 earnings, expected to be in late January or early February. That would bring total second-half 2023 buybacks to $6.5 billion, about $1.5 billion more than was projected at a meeting company officials had with analysts in June. With the fourth-quarter share repurchases, full-year shareholder distributions are estimated at about $23 billion.
Speaking to investors on November 2, Chief Financial Officer Sinead Gorman said Shell is delivering "more value with less emissions, guided by our principles of performance, discipline and simplification."
"Shell delivered another quarter of strong operational and financial performance, capturing opportunities in volatile commodity markets," said Shell Chief Executive Officer Wael Sawan in announcing earnings.
Investors agreed, bidding up shares of Shell about 4% on November 2.
Globally, Shell is involved with about 885 capital and maintenance projects, which have a total investment value (TIV) of about $142.7 billion, according to IIR's Global Market Intelligence (GMI) platform. Geographically, these projects are concentrated in Canada ($30.6 billion), Brazil ($28.9 billion), the U.K. ($26.6 billion) and the U.S. ($23 billion). By industry, these projects are clustered in Electric Power ($67.7 billion), Oil and Gas Production ($50.3 billion) and Chemical Processing ($15.1 billion).
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
