US oil giants ExxonMobil and Chevron reported another quarter of heady profits Friday (Apr 28) as both companies continued to direct large cash payments to shareholders.
Strong refining results offset the effect of lower crude
prices in the first quarter compared with the year-ago period, lifting profits
and enabling ExxonMobil to return US$8.1 billion to shareholders and Chevron
US$6.6 billion in dividends and share repurchases.
"We're delivering strong financial results and
increasing cash return to shareholders," said Chevron Executive Mike
Wirth, pointing to a 65 per cent jump in shareholder repayments compared with
the year-ago period.
The results extend a bountiful period for the US oil giants
in the wake of a global energy market roiled by Russia's invasion of Ukraine.
Both companies pointed to a hit from recent windfall profit taxes that deprived
them of even bigger earnings.
Results in the 2022 period were lifted by spiking oil prices
following Russia's invasion of Ukraine.
In the most recent period, crude prices traded in the
US$70-a-barrel range for most of the quarter.
While that's down from the spike in the 2022 period after
Russia's invasion of Ukraine, crude prices remain at a fairly high level.
At ExxonMobil, first-quarter profits more than doubled to
US$11.4 billion, while revenues declined 4.3 per cent to US$86.6 billion.
Results in the year-ago period were dented by US$3.4 billion
in one-time costs connected to ExxonMobil's withdrawal from the Sakhalin
offshore oilfield following the invasion of Ukraine.
But while crude prices were down 23 per cent compared with
the 2022 quarter, production volumes of oil and natural gas rose 4.1 per cent.
TIGHTNESS AHEAD?
The oil giant's integrated model - which makes it a consumer
of crude at its network of petroleum refineries - meant it also benefited from
lower oil prices in ExxonMobil's energy products division.
Chief Executive Darren Woods said the company "is
growing value by increasing production from our advantaged assets to meet
global demand".
Woods, in an interview on CNBC, described current market
conditions as "fairly mixed", noting that the industry is emerging
from a seasonally moderate period as far as demand.
A key question will be the extent that demand rises in China
as it reopens its economy.
In a "tight" market, "there's not a lot of
levers to pull on production," Woods told the network.
At Chevron, profits rose 5 per cent to US$6.5 billion, while
revenues fell 6.6 per cent to US$50.8 billion.
Chevron's oil and gas production volumes fell due to asset
sales and the end of a concession in Thailand.
The streak of massive profits by US oil giants has sparked
criticism from President Joe Biden and others, who have urged petroleum
producers to boost volumes rather in a period of elevated inflation rather than
spend extra cash on dividends and share repurchases.
The first quarter included a negative US$200 million hit for
additional European taxes on the energy sector, ExxonMobil said.
Chevron, in turn, pointed to a US$130 million tax hit due to
an energy profits levy in Britain.
Shares of ExxonMobil rose 2.1 per cent to US$119.21, while
Chevron dipped 0.7 per cent to US$165.71.
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