Exxon, Chevron strike tripled profits
Soaring demand, Texas operations helped deliver billions; oil execs preach ‘discipline’
Oil majors Exxon Mobil and Chevron were expected to report blockbuster profits for the second quarter, but both delivered results beyond the already high expectations.
On Friday, Houston-based
Exxon reported $17.9 billion in profits for the quarter ending Saturday, compared with $4.7 billion during the same period last year. San Ramon, Calif.based Chevron reported $11.6 billion in profits for the second quarter, up from the $3.1 billion during the same quarter in 2021.
A number of factors helped both companies more than triple their profits for the quarter, such as soaring demand for oil as the pandemic waned and the crude prices hovering around $100 a barrel amid Russia’s war with Ukraine. But investors on Friday also focused on the companies’ efforts to make the most of their Texas operations in the nation’s No. 1 oil field, the Permian Basin.
The Permian Basin, which straddles southeastern New Mexico and West Texas, has been a model of oil production consistency. It’s churning out record amounts of oil and natural gas — and rewarding companies that have invested in the region.
Overspending in shale basins like the Permian, however, has burned oil companies and their investors in the past, so Exxon and Chevron on Friday reassured investors that they remained disciplined about their production from the prolific field.
Houston-based Exxon Mobil said it’s on track to increase production in the Permian by 25 percent over last year while Chevron said its output there has increased 15 percent since this time last year. But both companies said they were merely sticking with their plans for moderated growth.
“The plan that we laid out some time ago, and we’re currently executing, hasn’t changed,” Exxon Mobil CEO Darren Woods said. “And we had a very slight ramp up as we head through the year, but nothing’s significantly different than what we have been doing.
The plans that we have in place should deliver.”
Chevron executives echoed the theme, saying they wouldn’t chase high oil prices.
“Our approach to the Permian, as you know, for many years has been to be very disciplined, very focused on generating the returns, and the efficiency that allow us to be profitable, regardless of the prices,” said Jay Johnson, vice president
of upstream at Chevron. “And so we’re not responding to short-term price.”
The price of West Texas Intermediate, the U.S. benchmark, topped $120 in spring before declining lately. It settled Friday at $98.62.
While the companies’ stellar second quarter results are comforting to investors — who boosted Exxon shares by nearly 5 percent and Chevron shares
by almost 9 percent Friday — they’re likely to draw criticism from some lawmakers. President Joe Biden has been calling on U.S. oil and gas companies to ramp up oil production and refine more gasoline in hopes of cutting prices at the pump and helping to ease inflation.
Last month, Biden called out Exxon as he pushed for cheaper gasoline, saying the company “made more money than God last year.”
Exxon made $23 billion in 2021; in just the first six months of 2022, the company has made $22.6 billion.
So the criticism aimed at Big Oil, which can do little to reduce gas prices in the short term, may not abate as long as drivers are paying substantially more — and in Houston, that’s still about a dollar more than last year.