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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Big Oil reported much-improved financial results for the just-concluded second quarter, aided by rising crude oil prices, economic growth and strong demand for chemicals. In their earnings statements, supermajors went out of their way to emphasize their financial discipline and their plans to increase shareholder payouts and lower debt.
Crude oil prices were about 15% higher than they were in the first quarter, fattening profits. Price gains were even more pronounced when compared with second-quarter 2020. Higher crude oil prices led to higher profits in the exploration and production (E&P) sector. Strong demand growth drove results in the chemicals business. Higher input costs, plus lagging demand for aviation jet fuel, hurt the refining business.
In comments echoing the tone of his peer chief executives at supermajors, Bernard Looney, chief executive at BP Plc (NYSE:BP) (London, England), on August 3 said: "Based on the underlying performance of our business, an improving outlook for the environment and confidence in our balance sheet, we are increasing our resilient dividend by 4% per ordinary share and in addition, we are commencing a buyback of $1.4 billion from first-half surplus cash flow. On average, at around $60 per barrel, we expect to be able to deliver buybacks of around $1.0 billion per quarter and to have capacity for an annual increase in the dividend per ordinary share of around 4%, through 2025."
Other supermajor integrated oil companies, including Chevron Corporation (NYSE:CVX) (San Ramon, California), Royal Dutch Shell (NYSE:RDS.A) (The Hague, Netherlands) and TOTALEnergies S.E. (NYSE:TTE) (Paris, France) reinstated share buybacks while announcing dramatically improved second-quarter financial results. The supermajors also reiterated their commitment to financial discipline in an attempt to rebuild confidence with investors and analysts who had grown weary of seeing Big Oil's billion-dollar bets turn out to be big-ticket busts.
Here is a round-up of second-quarter results from the world's largest supermajor integrated oil companies:
BP
BP earned $3.1 billion for the second quarter, compared with $4.7 billion for first-quarter 2021 and a loss of $16.8 billion in the comparable year-earlier quarter. Debt repayments whittled the company's debt load to $33 billion, from $40.9 billion a year earlier.
On a segment basis, pre-tax profit at BP's gas and low-carbon energy business fell to $937 million from $3.4 billion in the first quarter and a loss of $7.8 billion a year in second-quarter 2020. But earnings from oil production rose to $3.1 billion in the just-completed period, compared with $1.5 billion in the first three months of 2021 and a loss of $14.3 billion in the April-to-June quarter of 2020.
The company is continuing to sell peripheral assets. Looking into the second half of the year, BP said it expected to realize $5 billion to $6 billion from asset sales. The supermajor expects to sell $25 billion of assets between the second half of 2020 and the second half of 2025. So far, it has sold about $14.9 billion of assets and received about $10 billion from the sales.
In the August 3 earnings release, BP's Looney said he was pleased at the pace of the company's transition from an international oil company to an international energy company, noting that BP was "delivering another quarter of strong performance while investing for the future in a disciplined way. This shows we continue to perform while transforming -- generating value for our shareholders today, while we transition the company for the future."
Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production Project Database is tracking $12.2 billion worth of BP projects under construction. Subscribers can click here for a list of detailed reports.
Shell
Shell's second-quarter results, released July 29, emphasized its liquefied natural gas (LNG) business, the closure of its refineries and the partnerships with customers in pursuit of decarbonization. The company is under a Dutch court order to cut its global carbon emissions by 45% by 2030 from a 2019 baseline.
Quarterly earnings were $3 billion. The company increased its dividend and said it wanted to buy back $2 billion of shares this year.
The company highlighted customer partnerships with carmakers Daimler AG (Stuttgart, Germany), General Motors Company (NYSE:GM) (Detroit, Michigan) and Rolls Royce (London, England) to support decarbonized transportation. It also emphasized its marketing agreements with Microsoft Corporation (NASDAQ:MSFT) (Redmond, Washington) and T-Mobile U.S. Incorporated (NASDAQ:TMUS) (Bellevue, Washington) for renewable electricity and an LNG supply deal with BHP Group Limited (NYSE:BHP) (Melbourne, Australia).
In its LNG business, Shell said it was seeking a market share of more than 20% in the global trade by 2030. Compared to 2019, it was working to lower operating costs about 20% by 2022. And it planned to add about 7 million tons per annum (mtpa) of new LNG capacity by the middle of this decade.
Industrial Info is tracking nearly $14.2 billion worth of Shell projects that are under construction. Subscribers can click here for a list of detailed reports.
ExxonMobil
Second-quarter results for Exxon Mobil Corporation (NYSE:XOM) (Irving, Texas) were driven by its chemicals business, which turned in the best quarter in history. For more on that, see August 2, 2021, article - Economic Recovery Boosts ExxonMobil's Earnings, Chemical Profits Shine.
Overall, the company earned $4.7 billion in the just-completed quarter, $2 billion more than the first quarter and a turnaround from the loss of $1.1 billion in the comparable year-earlier second quarter.
Second quarter capital expenditures (capex) were $3.8 billion, about $1.5 billion less than the year-earlier second quarter. For the first half of 2021, ExxonMobil's capex was about $6.9 billion, down approximately 44% from the first half of 2020.
Prices for crude were about 13% higher than the first quarter. Gas realizations were about 1% less than the prior quarter. Production in the Permian Basin surged 34% to roughly 400,000 barrels of oil equivalent per day (BOE/d), compared with the comparable year-earlier quarter.
With earnings of $2.3 billion in the just-completed quarter, the chemicals segment accounted for nearly half of overall earnings. The company said the best-ever results in the segment were a result of "reliable operations, higher margins and continued cost discipline."
"Positive momentum continued during the second quarter across all of our businesses as the global economic recovery increased demand for our products," Darren Woods, chairman and chief executive officer, said in an earnings-related press release July 30. "We're realizing significant benefits from an improved cost structure, solid operating performance and low cost of supply investments that, together, are generating attractive returns and strong cash flow to fund our capital program, pay the dividend and reduce debt."
But investors seemed to downplay the company's positive earnings to instead focus on how three new dissident board members could shake up the 151-year-old company. Also, a year ago, ExxonMobil was removed from the Dow Jones Industrial Average, where it had been one of 30 bellwether industrial stocks since 1928.
Industrial Info is tracking more than $16.5 billion worth of ExxonMobil projects that are under construction. Subscribers can click here for a list of detailed reports.
Chevron
Quarterly revenue rose by about $20 billion, to $36.1 billion from $15.9 billion, and earnings rose to $3.1 billion from a loss of $8.3 billion, in the year-earlier quarter. Chevron acquired Anadarko two years ago.
E&P earnings swung to a profit of $3.2 billion in the just-ended quarter from a loss of $6.1 billion in second-quarter 2020. Profits at the Refining & Marketing (downstream) segment reached $839 billion, compared with a loss of $1 billion in the year-earlier quarter. The company's second-quarter 2021 earnings were dragged down by about $935 million in charges.
Like its brethren supermajors, Chevron trimmed its capex in the just-completed quarter, to $2.8 billion from $3.3 billion a year ago.
In announcing earnings on July 30, Chairman and Chief Executive Officer Mike Wirth said: "Second-quarter earnings were strong, reflecting improved market conditions, combined with transformation benefits and merger synergies. Our free cash flow was the highest in two years due to solid operational and financial performance and lower capital spending. We will resume share repurchases in the third quarter at an expected rate of $2 billion to $3 billion per year."
Industrial Info is tracking $34.5 billion worth of Chevron projects that are under construction. Subscribers can click here for a list of detailed project reports.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
Crude oil prices were about 15% higher than they were in the first quarter, fattening profits. Price gains were even more pronounced when compared with second-quarter 2020. Higher crude oil prices led to higher profits in the exploration and production (E&P) sector. Strong demand growth drove results in the chemicals business. Higher input costs, plus lagging demand for aviation jet fuel, hurt the refining business.
In comments echoing the tone of his peer chief executives at supermajors, Bernard Looney, chief executive at BP Plc (NYSE:BP) (London, England), on August 3 said: "Based on the underlying performance of our business, an improving outlook for the environment and confidence in our balance sheet, we are increasing our resilient dividend by 4% per ordinary share and in addition, we are commencing a buyback of $1.4 billion from first-half surplus cash flow. On average, at around $60 per barrel, we expect to be able to deliver buybacks of around $1.0 billion per quarter and to have capacity for an annual increase in the dividend per ordinary share of around 4%, through 2025."
Other supermajor integrated oil companies, including Chevron Corporation (NYSE:CVX) (San Ramon, California), Royal Dutch Shell (NYSE:RDS.A) (The Hague, Netherlands) and TOTALEnergies S.E. (NYSE:TTE) (Paris, France) reinstated share buybacks while announcing dramatically improved second-quarter financial results. The supermajors also reiterated their commitment to financial discipline in an attempt to rebuild confidence with investors and analysts who had grown weary of seeing Big Oil's billion-dollar bets turn out to be big-ticket busts.
Here is a round-up of second-quarter results from the world's largest supermajor integrated oil companies:
BP
BP earned $3.1 billion for the second quarter, compared with $4.7 billion for first-quarter 2021 and a loss of $16.8 billion in the comparable year-earlier quarter. Debt repayments whittled the company's debt load to $33 billion, from $40.9 billion a year earlier.
On a segment basis, pre-tax profit at BP's gas and low-carbon energy business fell to $937 million from $3.4 billion in the first quarter and a loss of $7.8 billion a year in second-quarter 2020. But earnings from oil production rose to $3.1 billion in the just-completed period, compared with $1.5 billion in the first three months of 2021 and a loss of $14.3 billion in the April-to-June quarter of 2020.
The company is continuing to sell peripheral assets. Looking into the second half of the year, BP said it expected to realize $5 billion to $6 billion from asset sales. The supermajor expects to sell $25 billion of assets between the second half of 2020 and the second half of 2025. So far, it has sold about $14.9 billion of assets and received about $10 billion from the sales.
In the August 3 earnings release, BP's Looney said he was pleased at the pace of the company's transition from an international oil company to an international energy company, noting that BP was "delivering another quarter of strong performance while investing for the future in a disciplined way. This shows we continue to perform while transforming -- generating value for our shareholders today, while we transition the company for the future."
Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production Project Database is tracking $12.2 billion worth of BP projects under construction. Subscribers can click here for a list of detailed reports.
Shell
Shell's second-quarter results, released July 29, emphasized its liquefied natural gas (LNG) business, the closure of its refineries and the partnerships with customers in pursuit of decarbonization. The company is under a Dutch court order to cut its global carbon emissions by 45% by 2030 from a 2019 baseline.
Quarterly earnings were $3 billion. The company increased its dividend and said it wanted to buy back $2 billion of shares this year.
The company highlighted customer partnerships with carmakers Daimler AG (Stuttgart, Germany), General Motors Company (NYSE:GM) (Detroit, Michigan) and Rolls Royce (London, England) to support decarbonized transportation. It also emphasized its marketing agreements with Microsoft Corporation (NASDAQ:MSFT) (Redmond, Washington) and T-Mobile U.S. Incorporated (NASDAQ:TMUS) (Bellevue, Washington) for renewable electricity and an LNG supply deal with BHP Group Limited (NYSE:BHP) (Melbourne, Australia).
In its LNG business, Shell said it was seeking a market share of more than 20% in the global trade by 2030. Compared to 2019, it was working to lower operating costs about 20% by 2022. And it planned to add about 7 million tons per annum (mtpa) of new LNG capacity by the middle of this decade.
Industrial Info is tracking nearly $14.2 billion worth of Shell projects that are under construction. Subscribers can click here for a list of detailed reports.
ExxonMobil
Second-quarter results for Exxon Mobil Corporation (NYSE:XOM) (Irving, Texas) were driven by its chemicals business, which turned in the best quarter in history. For more on that, see August 2, 2021, article - Economic Recovery Boosts ExxonMobil's Earnings, Chemical Profits Shine.
Overall, the company earned $4.7 billion in the just-completed quarter, $2 billion more than the first quarter and a turnaround from the loss of $1.1 billion in the comparable year-earlier second quarter.
Second quarter capital expenditures (capex) were $3.8 billion, about $1.5 billion less than the year-earlier second quarter. For the first half of 2021, ExxonMobil's capex was about $6.9 billion, down approximately 44% from the first half of 2020.
Prices for crude were about 13% higher than the first quarter. Gas realizations were about 1% less than the prior quarter. Production in the Permian Basin surged 34% to roughly 400,000 barrels of oil equivalent per day (BOE/d), compared with the comparable year-earlier quarter.
With earnings of $2.3 billion in the just-completed quarter, the chemicals segment accounted for nearly half of overall earnings. The company said the best-ever results in the segment were a result of "reliable operations, higher margins and continued cost discipline."
"Positive momentum continued during the second quarter across all of our businesses as the global economic recovery increased demand for our products," Darren Woods, chairman and chief executive officer, said in an earnings-related press release July 30. "We're realizing significant benefits from an improved cost structure, solid operating performance and low cost of supply investments that, together, are generating attractive returns and strong cash flow to fund our capital program, pay the dividend and reduce debt."
But investors seemed to downplay the company's positive earnings to instead focus on how three new dissident board members could shake up the 151-year-old company. Also, a year ago, ExxonMobil was removed from the Dow Jones Industrial Average, where it had been one of 30 bellwether industrial stocks since 1928.
Industrial Info is tracking more than $16.5 billion worth of ExxonMobil projects that are under construction. Subscribers can click here for a list of detailed reports.
Chevron
Quarterly revenue rose by about $20 billion, to $36.1 billion from $15.9 billion, and earnings rose to $3.1 billion from a loss of $8.3 billion, in the year-earlier quarter. Chevron acquired Anadarko two years ago.
E&P earnings swung to a profit of $3.2 billion in the just-ended quarter from a loss of $6.1 billion in second-quarter 2020. Profits at the Refining & Marketing (downstream) segment reached $839 billion, compared with a loss of $1 billion in the year-earlier quarter. The company's second-quarter 2021 earnings were dragged down by about $935 million in charges.
Like its brethren supermajors, Chevron trimmed its capex in the just-completed quarter, to $2.8 billion from $3.3 billion a year ago.
In announcing earnings on July 30, Chairman and Chief Executive Officer Mike Wirth said: "Second-quarter earnings were strong, reflecting improved market conditions, combined with transformation benefits and merger synergies. Our free cash flow was the highest in two years due to solid operational and financial performance and lower capital spending. We will resume share repurchases in the third quarter at an expected rate of $2 billion to $3 billion per year."
Industrial Info is tracking $34.5 billion worth of Chevron projects that are under construction. Subscribers can click here for a list of detailed project reports.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
