Energy giants Exxon Mobil and Chevron topped earnings estimates Friday as both companies posted record profits in the second quarter.
Exxon and Chevron stock rose Friday, helped by U.S. crude oil futures increasing around 2% to $98 per barrel Friday.
Exxon Mobil Earnings
Estimates: Analysts projected Exxon earnings per share of $3.84 on $111.3 billion in revenue for the second quarter.
Results: Exxon Mobil earnings soared 276% to $4.14 per share. Sales spiked 70% to $115.7 billion.
The company said this increase was driven by a tight supply and high demand for oil, natural gas and refined products. This has increased both natural gas realizations and refining margins well above the 10-year range, XOM reported.
"Earnings and cash flow benefited from increased production, higher realizations, and tight cost control," CEO Darren Woods said in a statement.
Woods added XOM plans to expand its refining capacity by around 250,000 barrels per day in the first-quarter of 2023. Capital spending decreased slightly from Q1 to $4.6 billion in Q2. However, spending has spiked 21% compared to last year.
Shares rose 4.57% to 96.88 during Friday's stock market trading. XOM stock climbed 1.2% to 92.64 Thursday, moving up slightly from its 50-day line.
Exxon Mobil ranks seventh in the Oil&Gas-Integrated industry group. The Irving, Texas, based multinational is diversified across much of the petroleum industry spectrum. Operations range from exploration and production of crude oil and natural gas to refining and marketing fuels and petrochemicals. Exxon is one of the largest publicly traded companies in the energy sector.
Exxon Mobil has been criticized by President Joe Biden, as the White House has accused major oil and gas companies of restraining refining levels, sending gasoline prices even higher. Energy sector executives have pointed out that refining is running near full capacity.
In early July, Exxon Mobil said it expects an addition of at least $2.5 billion to its bottom line in the second-quarter, a direct result of rising prices for oil and gas. XOM's revenue in the first quarter increased 53% year over year to $90.5 billion. Earnings soared 218% to $2.07 per share.
Exxon Mobil has a Composite Rating of 98. It has a 97 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share-price movement with a 1 to 99 score. The rating shows how a stock's performance over the last 52 weeks holds up against all the other stocks in IBD's database. The stock also has an EPS Rating of 78.
Chevron Earnings
Estimates: Wall Street expected Chevron earnings of $5.08 per share and $58.6 billion in sales.
Results: Chevron earnings per share leapt 240% to $5.82. Revenue spiked 83% to $68.7 billion in the second quarter.
Capital and exploratory spending in the first half of the year increased 26% to $6.7 billion, up from $5.3 billion in 2021.
"Second quarter financial performance improved as we delivered a return on capital employed of 26%," CEO Mike Wirth said in a press release. "We more than doubled investment compared to last year to grow both traditional and new energy business lines."
CVX stock rose 8.65% Friday, signaling a move above the 50-day line. Shares gained 0.8% to 150.39 Thursday. California-based Chevron, one of the world's leading integrated energy companies, produces crude oil and natural gas. The company also manufactures transportation fuels, lubricants and petrochemicals.
On April 29, Chevron reported Q1 revenue of $54.4 billion, up from $32 billion in the same quarter in 2021. That represented a 70% increase, year over year. EPS jumped to $3.25 a share from 90 cents, an increase of 261%.
Chevron recently told investors it plans to increase production in the Permian Basin, the giant shale oil field spanning parts of Texas and New Mexico. CVX produced 692,000 barrels of oil equivalent per day in the Permian Basin in the first quarter. The company has now raised its 2022 output guidance for the area to between 700,000 and 750,000 barrels per day. CVX added it is on track to raise the Permian Basin's output to 1 million barrels a day by 2025.
Chevron ranks fifth in the Oil&Gas-Integrated industry group. The stock has a 98 Composite Rating and a Relative Strength Rating of 94. Additionally, it has a 79 EPS Rating.
Profits Increase But Production Flat
The quarterly reports roll in as data from the U.S. Energy Information Administration shows oil and gas companies downshifted both spending and production for the second-quarter.
An EIA scan of 53 public U.S. oil and gas companies, collectively responsible for about 34% of domestic production, showed combined cash flows increased 86% to $25.7 billion during the first quarter. Meanwhile capital spending nearly doubled compared to 2021. However, these same companies reported a 5% decline in capital expenditures in the second-quarter vs. Q1 this year. Crude oil production has increased 10% compared to the first quarter, but it remains flat compared to Q4 2021.
Oil stocks have consistently outperformed the market throughout 2022 and Exxon Mobil and CVX have posted strong profits. That growth owed largely to the inflated price of crude oil, as well as gasoline at the pump, which on Wednesday averaged $4.30 according to AAA data.
However, the EIA found that while the price of crude oil has increased, supply chain issues and production expenses continue to pressure the energy sector. The costs of supplies and labor for oil production have more than doubled from the pre-pandemic average, according to the Energy Information Administration.
First-quarter reporting showed capital spending for oil and gas producers was up an average 23% this year compared to 2021. XOM reported a 57% increase in capital spending to $4.9 billion in Q1. Chevron stuck to its forecast for a 12% increase for the year, to $2.8 billion. The bulk of that spending — some analysts have estimated around two-thirds — went toward covering inflation costs. Only 8% was for new production growth.
However, the number of active oil rigs in the U.S. has recently angled higher. This week there were 767 active rigs in the U.S. That is an increase of nine from the previous week and a 5% increase compared to early June, according to Baker Hughes. BKR releases weekly oil rig counts every Friday.
U.S. crude oil production should run around 11.9 million barrels per day for all of 2022, an average increase of 700,000 barrels a day compared to 2021, according to EIA estimates. Forecasts also suggest output in 2023 will rise to more than 12.8 million barrels per day. If this prediction holds, it would surpass the annual average record of 12.3 million barrels per day set in 2019.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
