ExxonMobil's Quarterly Earnings Soar, Eclipsing Results from Peers

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Crude oil prices see-sawed in the second quarter, but profits rose for three large integrated supermajor oil companies--Exxon Mobil Corporation (NYSE:XOM) (Spring, Texas), Shell plc (NYSE:SHEL) (London, England) and BP plc (NYSE:BP) (London, England). Chevron Corporation (NYSE:CVX) (San Ramon, California) was the outlier, reporting declining net earnings. Cost cutting and increased production helped offset price volatility throughout the April-to-June period.

Overall, the four companies earned about $19.9 billion for the just concluded quarter, up from the $19.6 billion they earned in the comparable year-earlier quarter but down sharply from the second quarter of 2022, when Russia's invasion of Ukraine sent energy prices soaring and elevated aggregate net earnings for these four companies to about $56.7 billion.

Click on the images at right to see prices for West Texas Intermediate and Brent crude oil.

Results for the four companies are summarized below.

Exxon Mobil
The largest U.S. oil company on August 2 reported profits of $9.2 billion on $93.1 billion of sales for the just-completed period, up from the $7.9 billion it earned on $82.9 billion of revenue in the comparable year-earlier quarter.

Click on the image at right to see three years of second-quarter net earnings, reported on the basis of generally accepted accounting principles (GAAP).

Production on a barrels of an oil equivalent (BOE) basis rose about 15% compared to the first quarter, to 4.4 million BOE per day (BOE/d) from 3.8 million BOE/d. It credited record production in Guyana and its legacy Permian Basin wells in Texas. During the quarter, Exxon Mobil closed its acquisition of Pioneer Natural Resources, which had a broad portfolio of Permian assets. That transaction boosted quarterly earnings about $500 million, Exxon Mobil said, adding that the integration and synergy benefits of that acquisition are exceeding expectations. It called the Pioneer acquisition "transformative."

The Spring, Texas-based supermajor also said it boosted its carbon capture and sequestration (CCS) business during the quarter with a new agreement that increased total contracted carbon dioxide (CO2) offtake with industrial customers to 5.5 million metric tons per year, which it said was more committed volume than any other company has announced.

During the just-completed quarter, the company said it submitted an application to the Guyanese government for the proposed Hammerhead offshore drilling project, which could include as many as 30 wells. Production is expected to reach 120,000 to 180,000 barrels of oil per day (BBL/d) when production begins in 2029, assuming government approval is secured. For more on the Hammerhead project, see July 18, 2024, article - Guyana Begins Review of Offshore Hammerhead Production Project.

"We delivered our second-highest 2Q earnings of the past decade as we continue to improve the fundamental earnings power of the company," said Darren Woods, chairman and chief executive officer. The company said it lowered "structural" cost by about $600 million during the quarter. Compared to 2019, cumulative costs are down about $10.7 billion, and the company said it is on track to deliver cumulative savings totaling $5 billion through the end of 2027 versus 2023.

Year-to-date capital and exploration expenditures were approximately $12.9 billion, and full-year outlays are anticipated to be about $28 billion, which includes about $3 billion of outlays tied to its Pioneer assets.

Chevron
Chevron, soon to become a Texas-based company, earned $4.4 billion on revenue of $51.2 billion for the just-completed quarter. Profits fell while sales rose compared with the comparable year-earlier quarter. The company said earnings were lower due to lower margins on refined product sales, the absence of prior year favorable tax items and negative foreign currency effects.

Despite an 11% increase in worldwide production, most of which took place in the U.S., including record production in the Permian Basin, profits from exploration & production fell about $466 million, to $4.5 billion from $4.9 billion in the year-earlier period. The profit decline was even more pronounced for the downstream, or refining & marketing, segment, where net earnings fell about $910 million, to about $597 million from $1.5 billion in the April-June 2023 period. For that year-earlier quarter, profits were about $6 billion.

Earlier this year, Chevron found its acquisition of Hess Corporation challenged by Exxon Mobil and Chinese oil company CNOOC, delaying that deal's expected second-quarter closure. For more on that, see April 9, 2024, article -- Chevron Buyout of Hess Challenged by ExxonMobil, CNOOC.

In reporting earnings August 2, the company highlighted agreements in Namibia, Brazil, Equatorial Guinea and Angola to increase the company's global exploration acreage position.

Earlier this month, Chevron said it plans to move its headquarters and corporate functions from San Ramon, California, to Houston, Texas, in stages over the next five years. Chevron currently has roughly 7,000 employees in the Houston area and approximately 2,000 employees in San Ramon. The San Ramon employees supporting Chevron's crude oil fields, technical facilities, and two refineries in California are expected to remain in the Golden State.

BP
Second-quarter net profits grew to $2.8 billion on $47 billion of revenue, an improvement on the $2.6 billion in net earnings from $48.5 billion of sales in the comparable year-earlier quarter.

Bolstered by the second-quarter results, BP said it increased its common-stock dividend 10% and committed to buying back $3.5 billion of stock in the second half of the year. The integrated supermajor repurchased about $3.5 billion of stock during the first half of this year.

During the just-completed quarter, BP made a final investment decision (FID) on the Kaskida floating oil production project in the Gulf of Mexico and took full ownership of a bioenergy venture but scaled back other projects in its biofuels portfolio.

Shell
GAAP net earnings for the second quarter rose to $3.5 billion on revenue of $74.5 billion, an improvement over year-earlier profits of $3.1 billion on $74.6 billion of sales.

In releasing its results August 1, the company announced a further $3.5 billion buyback program for the next three months. Over the last four quarters, Shell has distributed about 43% of free cash flow from operations. The company did not change its common-stock dividend.

Shell has made $700 million of "structural cost reductions" during the first half of 2024, bringing the total reductions since 2022 to $1.7 billion. Last year, it announced a goal of cutting structural costs by $2 billion to $3 billion by yearend 2025.

During the just-completed quarter, the London-based integrated supermajor said it "further strengthened our leadership position" in liquefied natural gas (LNG) with an agreement to acquire Singapore's Pavilion Energy, a partner in an Abu Dhabi LNG project, and making final investment decision (FID) on the Manatee backfill project in Trinidad and Tobago. It also made an FID on a Brazilian LNG project.

Shell's LNG volumes fell from the comparable year-earlier period. Its price realizations for Brent crude oil were up nearly $7 per barrel but gas at Henry Hub was down slightly on a year-over-year basis.

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