Exxon exceeds profit expectations with higher production despite low oil prices
Exxon Mobil - the United States’ largest oil producer - beat Wall Street expectations for the second quarter profit on Friday, as increased oil and gas production and low production costs compensated for the lower crude oil prices.
Exxon Mobil reported that oil and gas production reached its highest level in any second quarter ever since Exxon Mobil was formed by the merger of Exxon Mobil and Exxon more than 25 year ago.
LSEG data showed that adjusted earnings for the second quarter totaled $7.1 billion or $1.64 a share. This was higher than analyst consensus estimates of $1.56 a share. Energy sector is struggling with price volatility, as OPEC+ increased production. Brent crude prices fell 11% during the second quarter.
The global tariffs imposed by U.S. president Donald Trump contributed to the price decline because they increased the likelihood of a weakening economy globally, which would have knock-on effects on oil demand.
Exxon CEO Darren Woods stated that the second quarter "once again proved the value and competitive advantage of our strategy, which continues to deliver for our investors regardless of market conditions or geopolitical development."
Exxon shares rose 1.5% before the market opened.
Exxon distributed $4.3 billion as dividends, and purchased $5 billion of shares in the last quarter. This buyback puts Exxon on track to reach its annual share purchase goal of $20 billion.
The main production areas of the company include the Permian Basin, the largest U.S. Oilfield, and the Stabroek block off the coasts of Guyana.
Exxon previously stated that the low costs of production in these fields allow them to remain profitable even when oil prices are lower.
The global production of 4.6 million barrels equivalent to oil per day increased from 4.5 millions boed during the previous quarter.
Yellowtail, Guyana's fourth floating production and storage facility, will be operational next week. Exxon, a partner in Guyana, lost a court case against Hess last month. This allowed Chevron, whose acquisition of Hess was completed by Exxon, to proceed.
Exxon claimed it had the contractual right of pre-emption to purchase Hess’ 30% stake in Stabroek Block.
Woods stated in a press conference that Exxon had sought legal opinions from third parties who were neutral about the joint operating agreements which governed the partnership of Exxon Hess, and China's CNOOC, in Guyana.
Woods stated that "in every case - and I mean literally every case - we were told our rights were very clear."
Woods, the CEO of Exxon, said that although Exxon's argument was commercially reasonable, it relied heavily on a textual interpretation that was too narrow. The company will take any necessary steps to improve future contracts.
The earnings from oil and gas production fell to $5.4 billion from $6.7 billion during the first quarter.
Exxon expects to have lower maintenance scheduled in its refinery business during the third-quarter. Sheila Dang reported from Houston, and Margueritachoy, Ni Williams and Barbara Lewis edited the story.
(source: Reuters)
