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Released August 03, 2022 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Four of the world's largest integrated oil supermajors posted blockbuster earnings in the second quarter, driven by a combination of higher oil and gas prices, increased production, rising demand, strong downstream margins, operating cost reductions and disciplined capital spending. Cash flow from operations shot up, and some of that incremental cash went to pay down debt. Shell plc (NYSE:SHEL) (London, England) announced a $6 billion stock buyback program, to be completed this year. BP plc (NYSE: BP) (London) increased its dividend 10% and expanded its existing stock buyback program. To varying degrees, the integrated supermajors also touted their investments in low-carbon and carbon-sequestration businesses.
The integrated supermajors--ExxonMobil Corporation (NYSE:XOM) (Irving, Texas), Chevron Corporation (NYSE:CVX) (San Ramon, California), Shell and BP--reported their quarterly earnings last week and this week. Each company's stock rose as stockholders welcomed the better-than-expected results. Several companies plumped quarterly earnings with the sale of peripheral assets; results also were affected by non-recurring gains and losses, some of which were tied to hedging or foreign exchange conversions. For related information, see August 2, 2022, article - U.S. Supermajors See Big Production Gains.
Click on the image at right to see the four supermajors' revenue and earnings for the just-completed quarter compared to year-earlier results.
ExxonMobil
ExxonMobil, the largest U.S.-based integrated oil supermajor, increased its Permian oil and gas production by approximately 130,000 barrels of oil equivalent per day (boe/d) and refining throughput by 180,000 barrels per day (BBL/d) versus the first half of 2021 to meet growing demand for crude oil, natural gas, and refined products.
The company's plan to expand the capacity of its Beaumont Refinery by about 250,000 BBL/d is on track and scheduled for completion in the first quarter of 2023. This would be the industry's largest single capacity addition in the U.S. since 2012.
"Earnings and cash flow benefited from increased production, higher (price) realizations and tight cost control," Darren Woods, chairman and chief executive officer, said in a statement July 29. "Strong second-quarter results reflect our focus on the fundamentals and the investments we put in motion several years ago and sustained through the depths of the pandemic. At the same time, we're supporting the transition to a lower-emission future, growing our portfolio of opportunities in carbon capture and storage, biofuels and hydrogen."
The company said its earnings were increased by natural gas price realizations and refining margins that were well above its 10-year range.
On the low-carbon business front, ExxonMobil said it had signed a memorandum of understanding to explore the development of a carbon capture and storage (CCS) project in Guangdong Province, China. That project, if built, could capture up to 10 million metric tons of carbon dioxide (CO2) per year. It would be one of the world's first CCS projects attached to a petrochemical complex.
The oil giant also announced plans to explore potential CCS projects in the Dutch North Sea, offshore Australia and Indonesia.
ExxonMobil's earnings were driven largely by its upstream exploration & production (E&P) business, where earnings rose 257% over the comparable year-earlier quarter. Compared to the second quarter of 2021, ExxonMobil said the price received for oil in the just-concluded period shot up 71% while natural gas price realizations were up 186%.
Click on the image at right to see the upstream financial performance of the four companies compared to year-earlier quarterly results.
The company's Permian Basin production averaged about 550,000 boe/d in the just-completed quarter. This year, ExxonMobil expects production in the Permian will grow about 25% compared to full-year 2021 production.
Industrial Info is tracking about 288 projects being developed by ExxonMobil around the world, with an aggregate value of $70.89 billion. Oil and gas production leads the pack, with 131 projects valued at $42.8 billion, followed by petroleum refining (70 projects valued at $10.6 billion), chemical processing (45 projects with aggregate value of $8.3 billion) and electric power (four projects, $6.7 billion value). Subscribers to Industrial Info's Global Market Intelligence (GMI) project databases can click here for a list of detailed project reports.
Chevron
Like ExxonMobil, Chevron also sharply increased quarterly revenue and earnings, partly because of increased production from the Permian Basin. In its second-quarter earnings release, issued July 29, it also touted its low-carbon businesses: "We believe the future of energy will be lower carbon. We intend to be a leader today, and in that future," said Chief Executive Officer Mike Wirth.
Like the other integrated supermajors, Chevron is straddling its traditional oil and gas business and non-traditional investments in renewable energy, hydrogen and low-carbon businesses. "We more than doubled investment compared to last year to grow both traditional and new energy business lines," Wirth added. "With Permian production more than 15% higher than a year ago and now as one of the leading renewable fuel producers in the United States, Chevron is increasing energy supplies to help meet the challenges facing global markets," Wirth added.
Earnings from the E&P segment nearly doubled in the just-completed quarter compared to year-earlier results. Overseas E&P outstripped U.S. upstream performance. In the refining & marketing segment, the situation was the same, with dramatic percentage gains coming from overseas downstream operations. Overall, Chevron's downstream profits more than tripled.
Click on the image at right to see how downstream earnings for the just-completed period compared to year-earlier results.
The company said it advanced its CCS business this past quarter by launching a project to reduce the carbon intensity of its upstream operations in California and forming an expanded joint venture to develop the Bayou Bend CCS hub in Texas.
Chevron also signed agreements to export four million tonnes of liquefied natural gas (LNG) per year out of the U.S. Gulf Coast starting in 2026.
Industrial Info is tracking approximately 225 active Chevron projects valued at about $31 billion. More than half of those investments are scheduled to be made in the U.S., followed by Kazakhstan, Israel, Angola and Australia. By industry, Chevron's planned spending is focused on oil and gas production ($18.8 billion) and chemical processing ($9.5 billion). Subscribers can click here for a list of detailed project reports.
Shell
In its July 28 earnings release, Shell highlighted its efforts to fight global climate change: "With volatile energy markets and the ongoing need for action to tackle climate change, 2022 continues to present huge challenges for consumers, governments and companies alike," said Shell Chief Executive Officer Ben van Beurden. "Consequently, we are using our financial strength to invest in secure energy supplies which the world needs today, taking real, bold steps to cut carbon emissions and transforming our company for a low-carbon energy future."
Years of asset high-grading paid off in spectacular upstream earnings, van Beurden said, adding that the company would be executing a $6 billion stock buyback program this year. Looking forward, the company said it expects to spend more than 30% of its cash flow from operations (CFFO) to fund shareholder distributions. In the just-completed quarter, Shell's CFFO was about $18.7 billion.
Van Beurden credited "increased discipline, integrated value delivery and improved resilience" for the dramatic improvement over earlier periods.
Shell sold its oil for an average of $101.42 per barrel in the just-completed period, up about 14% from an average of $88.63 in this year's first quarter. The company did even better, on a percentage basis, with its natural gas price realizations, which rose approximately 58% on a quarter-over-quarter basis, to an average of $13.85 per million cubic feet (Mcf) from $8.79 in the first quarter of this year.
For the quarter, the company's Renewables & Energy Solutions segment reported "exceptionally strong" adjusted earnings and adjusted earnings before interest, taxes and depreciation (EBITDA) resulting from higher trading and margins for gas and power, due to "extraordinary gas and power price volatility" in North America, Europe and Australia. Shell also made a final investment decision (FID) to build a 200-megawatt electrolyzer, Holland Hydrogen I, which would be Europe's largest renewable hydrogen plant when it becomes operational in 2025. That segment also reached business milestones in India, Italy and Texas.
Industrial Info is tracking 815 active Shell projects around the world valued collectively at about $107 billion. Most of that, about $58 billion, is designated for oil and gas production, while another $31 billion is slated to be invested in the power segment. Subscribers can click here for a list of detailed project reports.
BP
Like Shell, BP faces a windfall profit tax in the U.K., where taxes are slated to rise to 65% from 40% for the companies' U.K. operations. That measure, enacted after the end of the second quarter, will show in third-quarter results and will remain in effect through the end of 2025. BP's tax burden in 2022 will increase by an estimated $800 million.
Commenting on the company's quarterly results, released August 2, Chief Executive Officer Bernard Looney said, "Today's results show that (BP) continues to perform while transforming. Our people have continued to work hard throughout the quarter helping to solve the energy trilemma--secure, affordable and lower carbon energy. We do this by providing the oil and gas the world needs today--while at the same time, investing to accelerate the energy transition."
Quarterly earnings before tax and interest at the company's upstream business more than doubled, to $9.9 billion from $4 billion in the year-earlier quarter. The downstream business did even better, increasing pre-tax and pre-interest earnings to $3.5 billion, up from $640 million in last year's second quarter.
In its low-carbon business, BP announced:
Industrial Info is tracking about 303 BP capital and maintenance projects around the world valued at about $40.5 billion. By industry, oil and gas production is slated to get the lion's share of spending, about $20 billion, followed by chemical processing (roughly $16 billion). Geographically, BP's project spending is expected to be focused in Australia ($14.4 billion), the U.S. ($5.7 billion), Indonesia ($5.5 billion) and Azerbaijan ($4.2 billion). Subscribers can click here for a list of detailed project reports.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
The integrated supermajors--ExxonMobil Corporation (NYSE:XOM) (Irving, Texas), Chevron Corporation (NYSE:CVX) (San Ramon, California), Shell and BP--reported their quarterly earnings last week and this week. Each company's stock rose as stockholders welcomed the better-than-expected results. Several companies plumped quarterly earnings with the sale of peripheral assets; results also were affected by non-recurring gains and losses, some of which were tied to hedging or foreign exchange conversions. For related information, see August 2, 2022, article - U.S. Supermajors See Big Production Gains.
ExxonMobil
ExxonMobil, the largest U.S.-based integrated oil supermajor, increased its Permian oil and gas production by approximately 130,000 barrels of oil equivalent per day (boe/d) and refining throughput by 180,000 barrels per day (BBL/d) versus the first half of 2021 to meet growing demand for crude oil, natural gas, and refined products.
The company's plan to expand the capacity of its Beaumont Refinery by about 250,000 BBL/d is on track and scheduled for completion in the first quarter of 2023. This would be the industry's largest single capacity addition in the U.S. since 2012.
"Earnings and cash flow benefited from increased production, higher (price) realizations and tight cost control," Darren Woods, chairman and chief executive officer, said in a statement July 29. "Strong second-quarter results reflect our focus on the fundamentals and the investments we put in motion several years ago and sustained through the depths of the pandemic. At the same time, we're supporting the transition to a lower-emission future, growing our portfolio of opportunities in carbon capture and storage, biofuels and hydrogen."
The company said its earnings were increased by natural gas price realizations and refining margins that were well above its 10-year range.
On the low-carbon business front, ExxonMobil said it had signed a memorandum of understanding to explore the development of a carbon capture and storage (CCS) project in Guangdong Province, China. That project, if built, could capture up to 10 million metric tons of carbon dioxide (CO2) per year. It would be one of the world's first CCS projects attached to a petrochemical complex.
The oil giant also announced plans to explore potential CCS projects in the Dutch North Sea, offshore Australia and Indonesia.
ExxonMobil's earnings were driven largely by its upstream exploration & production (E&P) business, where earnings rose 257% over the comparable year-earlier quarter. Compared to the second quarter of 2021, ExxonMobil said the price received for oil in the just-concluded period shot up 71% while natural gas price realizations were up 186%.
The company's Permian Basin production averaged about 550,000 boe/d in the just-completed quarter. This year, ExxonMobil expects production in the Permian will grow about 25% compared to full-year 2021 production.
Industrial Info is tracking about 288 projects being developed by ExxonMobil around the world, with an aggregate value of $70.89 billion. Oil and gas production leads the pack, with 131 projects valued at $42.8 billion, followed by petroleum refining (70 projects valued at $10.6 billion), chemical processing (45 projects with aggregate value of $8.3 billion) and electric power (four projects, $6.7 billion value). Subscribers to Industrial Info's Global Market Intelligence (GMI) project databases can click here for a list of detailed project reports.
Chevron
Like ExxonMobil, Chevron also sharply increased quarterly revenue and earnings, partly because of increased production from the Permian Basin. In its second-quarter earnings release, issued July 29, it also touted its low-carbon businesses: "We believe the future of energy will be lower carbon. We intend to be a leader today, and in that future," said Chief Executive Officer Mike Wirth.
Like the other integrated supermajors, Chevron is straddling its traditional oil and gas business and non-traditional investments in renewable energy, hydrogen and low-carbon businesses. "We more than doubled investment compared to last year to grow both traditional and new energy business lines," Wirth added. "With Permian production more than 15% higher than a year ago and now as one of the leading renewable fuel producers in the United States, Chevron is increasing energy supplies to help meet the challenges facing global markets," Wirth added.
Earnings from the E&P segment nearly doubled in the just-completed quarter compared to year-earlier results. Overseas E&P outstripped U.S. upstream performance. In the refining & marketing segment, the situation was the same, with dramatic percentage gains coming from overseas downstream operations. Overall, Chevron's downstream profits more than tripled.
The company said it advanced its CCS business this past quarter by launching a project to reduce the carbon intensity of its upstream operations in California and forming an expanded joint venture to develop the Bayou Bend CCS hub in Texas.
Chevron also signed agreements to export four million tonnes of liquefied natural gas (LNG) per year out of the U.S. Gulf Coast starting in 2026.
Industrial Info is tracking approximately 225 active Chevron projects valued at about $31 billion. More than half of those investments are scheduled to be made in the U.S., followed by Kazakhstan, Israel, Angola and Australia. By industry, Chevron's planned spending is focused on oil and gas production ($18.8 billion) and chemical processing ($9.5 billion). Subscribers can click here for a list of detailed project reports.
Shell
In its July 28 earnings release, Shell highlighted its efforts to fight global climate change: "With volatile energy markets and the ongoing need for action to tackle climate change, 2022 continues to present huge challenges for consumers, governments and companies alike," said Shell Chief Executive Officer Ben van Beurden. "Consequently, we are using our financial strength to invest in secure energy supplies which the world needs today, taking real, bold steps to cut carbon emissions and transforming our company for a low-carbon energy future."
Years of asset high-grading paid off in spectacular upstream earnings, van Beurden said, adding that the company would be executing a $6 billion stock buyback program this year. Looking forward, the company said it expects to spend more than 30% of its cash flow from operations (CFFO) to fund shareholder distributions. In the just-completed quarter, Shell's CFFO was about $18.7 billion.
Van Beurden credited "increased discipline, integrated value delivery and improved resilience" for the dramatic improvement over earlier periods.
Shell sold its oil for an average of $101.42 per barrel in the just-completed period, up about 14% from an average of $88.63 in this year's first quarter. The company did even better, on a percentage basis, with its natural gas price realizations, which rose approximately 58% on a quarter-over-quarter basis, to an average of $13.85 per million cubic feet (Mcf) from $8.79 in the first quarter of this year.
For the quarter, the company's Renewables & Energy Solutions segment reported "exceptionally strong" adjusted earnings and adjusted earnings before interest, taxes and depreciation (EBITDA) resulting from higher trading and margins for gas and power, due to "extraordinary gas and power price volatility" in North America, Europe and Australia. Shell also made a final investment decision (FID) to build a 200-megawatt electrolyzer, Holland Hydrogen I, which would be Europe's largest renewable hydrogen plant when it becomes operational in 2025. That segment also reached business milestones in India, Italy and Texas.
Industrial Info is tracking 815 active Shell projects around the world valued collectively at about $107 billion. Most of that, about $58 billion, is designated for oil and gas production, while another $31 billion is slated to be invested in the power segment. Subscribers can click here for a list of detailed project reports.
BP
Like Shell, BP faces a windfall profit tax in the U.K., where taxes are slated to rise to 65% from 40% for the companies' U.K. operations. That measure, enacted after the end of the second quarter, will show in third-quarter results and will remain in effect through the end of 2025. BP's tax burden in 2022 will increase by an estimated $800 million.
Commenting on the company's quarterly results, released August 2, Chief Executive Officer Bernard Looney said, "Today's results show that (BP) continues to perform while transforming. Our people have continued to work hard throughout the quarter helping to solve the energy trilemma--secure, affordable and lower carbon energy. We do this by providing the oil and gas the world needs today--while at the same time, investing to accelerate the energy transition."
Quarterly earnings before tax and interest at the company's upstream business more than doubled, to $9.9 billion from $4 billion in the year-earlier quarter. The downstream business did even better, increasing pre-tax and pre-interest earnings to $3.5 billion, up from $640 million in last year's second quarter.
In its low-carbon business, BP announced:
- Plans to take a 40.5% stake in the Asian Renewable Energy Hub (AREH) project to lead and operate one of the world's largest planned renewables and green hydrogen energy hubs based in Western Australia. Subscribers can click here for the project report and click here for the plant profile.
- Its intent to partner with Iberdrola to develop large-scale integrated green hydrogen production in Spain and Portugal.
- Continued progress in executing on its renewable energy strategy, submitting bids for two offshore wind leases in the Netherlands.
Industrial Info is tracking about 303 BP capital and maintenance projects around the world valued at about $40.5 billion. By industry, oil and gas production is slated to get the lion's share of spending, about $20 billion, followed by chemical processing (roughly $16 billion). Geographically, BP's project spending is expected to be focused in Australia ($14.4 billion), the U.S. ($5.7 billion), Indonesia ($5.5 billion) and Azerbaijan ($4.2 billion). Subscribers can click here for a list of detailed project reports.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
