Exxon Mobil Corp. and Chevron Corp. they are making profits not seen since oil topped $145 a barrel in 2008, nearly double the current price.
The strong results over the past four quarters underscore how they have become financially sound in response to back-to-back oil market collapses by cutting costs and streamlining portfolios. Now, ample cash flows mean shareholders have little reason to worry about the sanctity of dividends, even as oil prices teeter around $78.
Exxon reported its best start to the year on Friday with first-quarter net income of $11.4 billion after oil production soared from new wells in the US and offshore South America. Chevron’s profit rose slightly to $6.6 billion as oil refining profits rebounded amid rising fuel demand.
Investors, however, did not seem thrilled by the results. Chevron’s production in the Permian Basin of Texas and New Mexico was down. And neither company increased the amount of cash they plan to return to shareholders. Exxon shares were up less than 1% at 8:50 a.m. in New York. Chevron slipped 0.6%.
Both companies have made big profits for four consecutive quarters, even as international crude prices fell more than 35% from last year’s peak. Exxon has earned more than $10 billion a quarter during that period, while Chevron’s average was close to $9 billion, which no company has done since at least 2008, when crude hit 147, 50 dollars
The results “reflect the changes we’ve made,” Exxon CEO Darren Woods said Friday during an interview with CNBC.
Exxon’s adjusted earnings of $2.83 per share were 20 cents higher than the Bloomberg Consensus. Chevron also beat expectations with $3.55 in adjusted earnings per share.
Exxon said its net debt-to-equity ratio fell to 4 percent at the end of the period, thanks in large part to a cash pile of nearly $33 billion. The company has sought to enrich investors through dividends and share buybacks, and Exxon is the best-performing energy stock in the S&P 500 this year.
The unexpected results were “really all about us significantly increasing our production volumes,” Chief Financial Officer Kathy Mikells said in an interview. He noted that Exxon’s offshore Guyana and US Permian production rose 40% on a combined basis from a year earlier.
As for Chevron, the company’s global fleet of refineries collected $1.8 billion during the period, a fivefold increase from the first quarter of 2022.
Chevron has pledged to keep paying investors even as it faces pressure to finance key new projects to expand production.
Chevron’s results followed disappointing performance at the end of 2022 and confusion over its share buyback strategy. Executives were forced to redraw development plans in the Permian Basin after wells clustered too close together hampered productivity.
–With assistance from Mitchell Ferman.
