Oil majors Chevron Corp. (CVX) and Exxon Mobil Corp. (XOM) on Friday reported sharp increase in third-quarter profits from last year on strong revenue growth that reflected higher crude oil prices.
With the price of crude in the third quarter up 44 percent from the same period a year ago, major oil companies’ earnings have returned to levels not seen in as much as four years.
Chevron’s third-quarter net income more than doubled to $4.05 billion or $2.11 per share, from $1.95 billion or $1.03 per share in the prior-year quarter. The Street expected earnings of $2.06 per share.
The latest quarter’s results include a write-off, an asset impairment, and a non-recurring contractual settlement totaling $930 million in the upstream segment, and a gain of $350 million on the sale of southern Africa refining, marketing and lubricant assets.
Total revenues and other income for the quarter rose 21 percent to $43.99 billion from $36.21 billion a year ago, but missed analysts’ consensus estimate of $46.67 billion.
Chevron’s worldwide net oil-equivalent production rose to 2.96 million barrels per day, representing its highest quarter ever, from 2.72 million barrels per day last year.
Chevron’s upstream segment’s earnings surged to $3.38 billion from $489 million last year, reflecting higher crude oil and natural gas realizations as well as higher natural gas sales volumes.
However, downstream earnings declined to $1.37 billion from $1.81 billion last year, reflecting lower gains on assets sales in the international segment.
“Our strong financial results reflect higher production and crude oil prices coupled with a continued focus on efficiency and productivity,” said Chevron Chief Executive Michael Wirth in a statement.
Exxon Mobil’s revenues and adjusted earnings as well as Chevron’s earnings beat analysts’ expectations, while Chevron’s revenues missed their estimates. Shares of both companies are rising in pre-market activity.
Exxon Mobil Corp on Friday reported a quarterly profit that topped analysts’ estimate on higher prices received for its oil and natural gas but its production volumes fell on a year-over-year basis
Exxon Mobil’s third-quarter net income was $6.24 billion, up 57.2 percent from $3.97 billion in the prior-year quarter. Earnings per share rose to $1.46 from $0.93 last year.
On average analysts expected earnings of $1.23 per share. Analysts’ estimates typically exclude one-time items.
Total revenues and other income rose 25 percent to $76.61 billion from $61.10 billion last year. Analysts were looking for revenue of $73.55 billion.
The company’s upstream earnings were $4.23 billion, up sharply from $1.57 billion last year, reflecting the strengthening of crude oil and natural gas prices.
Downstream earnings rose to $1.64 billion from $1.53 billion last year as industry fuels margins strengthened, while Chemical segment earnings fell to $713 million from $1.09 billion last year.
However, Exxon Mobil’s oil-equivalent production for the quarter declined 2 percent from last year to 3.79 million oil-equivalent barrels per day.
During the quarter, the company distributed $3.5 billion in dividends to shareholders. Capital and exploration expenditures were $6.6 billion, up 10 percent from the prior year.
Oil-equivalent production was 3.8 million barrels per day, down 2 percent from the third quarter of 2017. Excluding entitlement effects and divestments, liquids production increased 6 percent, as growth in North America more than offset decline and higher downtime. Natural gas volumes decreased 4 percent, excluding entitlement effects and divestments, largely due to a continuing near-term shift in U.S. unconventional development from dry gas to liquids.
“We are seeing the benefits of integration as we capture value from advantaged feedstock from the Permian and Western Canada for our North American refineries,” said Darren W. Woods, Exxon Mobil chairman and chief executive officer. “The logistical network we’ve established provides reliable connectivity between Upstream production and manufacturing facilities. Operational performance improved significantly versus the second quarter with lower levels of scheduled maintenance and reliability levels in line with our expectations.”
“We’re pleased with the increase in production from the second quarter of 2018 recognizing it reflects contributions from just one of our key growth areas, the Permian,” Woods said. “We expect to continue to increase volumes over time as we ramp up activity in the Permian and new projects start up.”
Exxon Mobil shares rose nearly 2 percent to $82.20 in pre-market trading. They are down 4.9 percent year-to-date on lower oil and gas production that, with the latest decline, has dropped in nine of the last 10 quarters.