Exxon Mobil and Chevron Report Soaring Profits Because of Higher Gas Prices

Exxon Mobil and Chevron, the largest U.S. oil companies, on Friday reported a second consecutive quarter of robust earnings as oil and natural gas prices continued to rise after the Russian invasion of Ukraine.

The two companies said they were increasing their production in the Permian Basin, the giant shale oil field straddling Texas and New Mexico, but were not seeking to ramp up oil and natural gas production overall despite pressure from the Biden administration, which is seeking to tamp down high energy prices.

In the past, Chevron, Exxon and other energy companies invested heavily when prices were high, only to see losses when prices fell as the industry flooded the market with supply. Now, they are enjoying higher profits without significantly increasing their output.

“There is a lot of uncertainty,” said Michael Wirth, Chevron’s chief executive. “One of the lessons of history is that just as the bad times don’t last forever, neither do the times when prices are strong,”

Exxon reported doubling quarterly earnings from a year earlier, even after a write-down of $3.4 billion from abandoning its operations in Russia.

Largely because of soaring oil prices, which rose in the quarter to well over $100 a barrel from $76, the company made $5.5 billion in the first three months of the year — an increase of more than $6 billion from the same quarter in 2021. The company made an $8.9 billion profit in the last three months of 2021.

Exxon, which is based in Texas, announced that it would buy back more of its own shares, now aiming to spend $30 billion through 2023, up from $10 billion.

“The quarter illustrated the strength of our underlying business,” said Darren Woods, Exxon’s chief executive. “Earnings increased modestly, as strong margin improvement and underlying growth was offset by weather” and other factors, he added.

Exxon reported that its oil and gas production was 4 percent lower than in the previous three months because of bad weather, divestments and planned maintenance. Kathryn Mikells, Exxon’s chief financial officer, said the company was being cautious about the future given the steep drop in energy demand and oil prices during the pandemic.

“We are going to be a little bit more conservative in the short term,” she said, despite the “positive momentum” the company was enjoying.

Exxon’s chemical business was particularly strong, with a profit of $2.1 billion, consistent with records set a year ago. Executives expressed optimism about exploration and production operations in Guyana and Brazil, and said they could lower emissions from their operations.

But Exxon and Chevron reported weaker results in international refining, due partly to higher costs and lower profitability of refined products.

“This was a mixed quarter for Exxon Mobil,” said Faisal A. Hersi, an energy analyst at Edward Jones. He said the solid chemicals performance was offset by “weaker results in upstream exploration and production and international downstream refining and marketing.”

Chevron reported a $6.3 billion profit, up from $1.37 billion in the same quarter in 2021. Its revenues jumped to $54.37 billion from $32 billion last year.

The company, which is based in California, pledged to continue increasing domestic production, although its total oil and gas production fell modestly. While domestic production increased 10 percent in the quarter over last year, global oil and natural production declined 8 percent. Most of the declines were due to contract expirations, executives noted.

The company’s capital expenditures were only 10 percent higher than last year, a reflection of industrywide caution about future oil and gas prices.

Mr. Wirth said production in the Permian Basin had increased as the company hydraulically fractured previously drilled wells.

Following plans put in place before the pandemic’s start in 2020, the company hopes to increase production in the Permian Basin by 10 percent this year and is on track to raise output to one million barrels a day by 2025 from 600,000 a day this year. Much of the gain has been made possible by Chevron’s acquisition of Noble Energy in 2020.

“We haven’t stepped up our program,” he said. “We haven’t stepped up the number of rigs. We haven’t stepped up spending. It’s all a function of getting our machine running again.”

He noted that “the last two years have been volatile and unpredictable.” Nevertheless, he said, “we’re on a path to achieving higher returns.”

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