Exxon Mobil Corp. and Chevron Corp. easily swept aside analyst estimates as the battered giants of the U.S. oil industry shook off two-and-a-half years of low oil prices and reported surging profits in the first quarter.
Exxon, the world’s biggest oil producer by market value, earned 95 cents a share, outperforming all but one of the 19 analysts’ estimates in a Bloomberg survey. Chevron, the second-largest U.S. driller, swung to a profit in a big way, scoring its largest quarterly gain since 2014 and a per-share result that was 64 percent higher than the average estimate.
As charter members of the elite supermajor clique that also includes Royal Dutch Shell Plc, BP Plc and Total SA, Exxon and Chevron are among the biggest beneficiaries of the 55 percent escalation in crude prices from the same period in 2016. Total reported a 56 percent profit increase on April 26 and if the trend holds, Shell and BP would post impressive results next week.
“It’s cutting costs, it’s getting more for every dollar you spend, it’s getting more from each well and getting it out faster,” said Brian Youngberg, an analyst at Edward Jones & Co. in St. Louis. “It just shows how these companies have had to adapt to a new environment.”
Exxon rose 1 percent to $82.05 at 10:34 a.m. in New York, while Chevron also was up 1 percent to $106.53.
Production Drop
Exxon’s profit surged even as oil and natural gas production fell 4 percent from the same period last year, according to a statement from the Irving, Texas-based company Friday. Exxon cut capital and exploration expenditures in the quarter 19 percent to $4.2 billion.
“In both cases, the earnings beat was largely from realized pricing rather than production,” said Pavel Molchanov, an analyst at Raymond James Financial Inc. in Houston. “Pricing is always a proverbial black box for multinational oil and gas producers, and it is not something that companies can themselves control.”
While benchmark Brent crude rose more than 50 percent last year to more than $50 a barrel, prices are down about 9 percent in 2017 as a resurgence in U.S. shale production threatens an attempt by the Organization of Petroleum Exporting Countries and its allies to eliminate a global oversupply.