ExxonMobil reported record quarterly profits of nearly $20bn on Friday as it benefited from elevated oil and natural gas prices, setting the stage for a fresh confrontation with the Biden administration over the cost of fuel at the pump.
The largest US supermajor’s results were echoed at rival Chevron, whose bumper third-quarter profit of $11.2bn was just shy of record earnings reported in its previous quarter.
The results will be cheered by shareholders but will keep the sector in the crosshairs of the White House, which has blamed oil companies for energy prices that have fanned decades-high US inflation.
President Joe Biden this year criticised Exxon for making “more money than God”. After Shell reported quarterly profit of $9.5bn on Thursday — its second-highest ever — he criticised the UK-based oil major for announcing plans to raise its dividend, “so the profits are going back into their shareholders, instead of going to the pump and lowering the prices”.
ExxonMobil reported $19.7bn in third-quarter net profit, or $4.68 a share, almost triple the $6.8bn, or $1.57 a share, earned a year ago. It was a sharp turnround from two years ago, when collapsing fuel demand in the pandemic led to a string of losses.
The Texas-based company attributed the results to “strong volume performance” and “rigorous cost control”, aside from the strength of commodity markets.
Kathy Mikells, Exxon’s chief financial officer, said the company had invested in production “well ahead of all of our [international oil company] peers”, noting the group’s rising output in the Permian Basin in west Texas and New Mexico and record-high fuel production from its North American oil refineries.
The company is “driving volumes at a time when clearly the world really needs our products”, she told the Financial Times.
Chevron’s third-quarter profit of $11.2bn, or $5.78 a share, was 84 per cent higher than net profit of $6.1bn, or $3.19 a share, a year before. Earnings at both Exxon and Chevron eclipsed Wall Street’s expectations.
Exxon also said it was increasing its quarterly dividend 3 per cent to $0.91 a share and indicated dividends would total $15bn this year. The company plans to buy back $30bn in shares this year and next. Capital spending on its business is expected to total about $23bn this year, lower than pre-pandemic spending levels.
Petrol prices in the US, which have soured Americans’ views of the economy, are averaging roughly $3.76 a gallon, down from a peak of more than $5 a gallon earlier this year but still high compared with recent years.
Brent crude oil prices have come down from their peak of nearly $130 a barrel in March but have remained elevated on continued tight supplies and more recently the Opec+ decision to slash supply despite growing concerns about an economic slowdown.
Global natural gas prices have also surged as Russia curtailed supplies into Europe, lifting Big Oil’s international gas businesses.
In addition to Exxon, Chevron and Shell, France’s TotalEnergies reported earnings of $9.9bn on Thursday, bringing total quarterly profits for the four global oil majors that have reported so far to $50.3bn. BP will report its results next week.
Increasing dividends and share repurchases, along with higher profits, have helped make oil companies top performers in the US stock market this year, even as the S&P 500 index has declined by more than a fifth.
Exxon shares are up 69 per cent this year and touched an all-time high of $107.55 a share on Thursday, while Chevron shares have gained 50 per cent, a sharp reversal after years of sluggish returns.
“We’re focused on winning back investors,” Pierre Breber, Chevron’s chief financial officer, told the FT.
