US oil giants report lower profits but lift shareholder payouts
Source: AFP
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ExxonMobil and Chevron reported profits Friday that were much lower than last year's due a drop in commodity prices, but still lofty enough to enable increased shareholder distributions.
The two US oil giants joined European rivals Shell and Total in seeing steep declines in their bottom-line results compared with the heady year-ago period when Russia's invasion of Ukraine sent crude and natural gas prices sky bound.
ExxonMobil reported profits of $7.9 billion, down 56 percent on a 28 percent drop in revenues to $82.9 billion.
Chevron reported profits of $6.0 billion, down 48 percent, while revenues declined 28 percent to $48.9 billion.
US crude prices in the second quarter of 2023 were down more than 30 percent compared with the year-ago period, which was dominated by worries about the loss of Russian crude supply.
Natural gas prices are also down sharply following a mild winter, while the comparative weakness in refinery margins reflects sluggish economic conditions in some key markets.
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ExxonMobil Chief Executive Darren Woods told CNBC that today's commodity prices were more in line with historic norms, adding "we're still in a fairly constructive market or positive market," with commodities either in line or above historic averages.
Woods also described demand as "pretty robust."
Cash to shareholders
The oil giants raised capital spending somewhat in response to the windfall over the last year, but have also emphasized returning cash to shareholders.
In the second quarter, ExxonMobil spent $8 billion on share repurchases and dividends, five percent above the year-ago period.
Chevron spent $7.2 billion to shareholders, up 37 percent, an increase highlighted in its earnings press release.
"Our quarterly financial results remain strong, and we returned record cash to shareholders," said Chief Executive Mike Wirth.
Although below the blowout profits of the year-ago period, the results still enabled ExxonMobil to score $19.3 billion in profits for the first half of 2023 and Chevron $12.6 billion.
Environmental NGO 350.org described the latest round of results as "another obscene profit... made at the expense of people and the planet." The group called for a "renewable energy revolution."
The latest profit figures could also attract attention from officials such as President Joe Biden, who has often called on oil companies to steer excess cash towards new production rather than shareholder distributions.
In their press releases, both ExxonMobil and Chevron spotlighted increased investment in the United States, especially in the Permian Basin in Texas and New Mexico, an area with unconventional oil and natural gas deposits.
ExxonMobil said it achieved record quarterly production in the Permian and that it remained on track for an overall increase of 10 percent in output in 2023.
Chevron also pointed to record quarterly production in the Permian, noting its recently announced $7.6 billion acquisition of PDC Energy, which includes additional acreage in the region.
Shares of ExxonMobil fell 1.5 percent to $103.81 in morning trading, while Chevron shed 1.1 percent to $157.99.
Source: AFP
