Exxon, Chevron earnings beat forecasts as US shale wells boost oil output

2024-02-02 23:18:34

Exxon Mobil and Chevron, two major US oil companies, beat earnings forecasts as higher-than-expected oil production from US shale fields allowed them to increase market share and helped cushion the impact of weakening oil prices. oil prices in international markets.

Exxon rose as much as 1.6% in New York and Chevron rose 2.8%. Exxon’s outsized result was also helped by a $1.14 billion increase from unsettled derivatives and record fuel production at its refineries.

Chevron, meanwhile, posted adjusted earnings of $3.45 per share, which exceeded the Bloomberg Consensus estimate by 23 cents. The oil explorer also increased its dividend by 8%, higher than expected.

The upbeat reports from North America’s biggest oil drillers, fueled by strong Permian Basin production growth, follow similar results from Shell Plc, which kicked off the big oil company’s earnings season on Thursday with adjusted net profit that it was more than US$1 billion above average.

Exxon’s business unit performed generously, posting more than $1 billion in earnings that offset the $410 million hit from lower oil prices. This strategy is a starting point for a company that has historically avoided trading as too risky and outside its traditional areas of expertise.

Both Exxon and Chevron are under pressure from investors to shore up cash flow by pumping more oil while avoiding a price-destroying oversupply.

Exxon is trying to thread the needle with a $60 billion acquisition of Pioneer Natural Resources Co. , which it expects to close by mid-year. The all-stock deal preserves cash for shareholders and expands Exxon’s portfolio of prime drilling targets in the Permian. Meanwhile, Chevron is following the same playbook with a $53 billion deal for Hess Corp.

Guidance toward more profitable oil production is a key part of Exxon CEO Darren Woods’ plan to double profits from 2019 to 2027. The Texas oil giant paid the fourth-highest combination of dividends and buybacks in the S&P 500 during the last 12 months.

Chevron is increasing production from the Permian in the United States with a target of 10% growth this year, which puts the company on track to pump 1 million barrels per day in the region by 2025.

“We’re in the best parts of the Permian,” Chief Financial Officer Pierre Breber said during an interview. “Our growth is more likely than the basin average, but it is representative of our level of activity and the level of activity of our partners.”