Exxon Mobil and Chevron together take in more than $30 billion in net income as natural gas prices soared - Morningstar

By Tomi Kilgore

Exxon Mobil stock rallies toward a record as energy giant addressed 'needs of the consumer' with record refining volumes; Chevron's stock also rallies

Shares of Exxon Mobil Corp. rallied to a record close Friday, as profit nearly tripled and revenue soared more than 50% to top the $100 billion mark again, fueled by a surge in natural-gas prices and record refining volumes.

Fellow oil and gas giant Chevron Corp.'s stock traded in record territory before paring gains, after the company also posted big profit and revenue beats, as the average sales price in the U.S. for natural gas more than doubled and jumped more than 30% for crude oil.

Combined, the two energy giants reported third-quarter net income of $30.89 billion and revenue of $178.71 billion.

Exxon Mobil Chief Executive Darren Woods said on the post-earnings conference call with analysts that the results reflects the company's efforts to help provide what consumers need.

"We continue to increase production to address the needs of the consumer, which [has] contributed to earnings and cash flow growth, a stronger balance sheet and significant value creation," Woods said, according to a FactSet transcript.

Exxon Mobil's stock (XOM) surged 2.9% to $110.70, to post a third-straight record close.

Meanwhile, Chevron's stock (CVX) ran up as much as 2.8% to an intraday high of $182.86, which was above the June 8, 2022 record close of $181.13, before pulling back to close up 1.2% at $179.98 to post a fourth-straight gain.

"[Chevron's] stock has performed strong [month-to-date], and while results are clearly positive, the recent run could result in a more muted reaction than otherwise expected," analyst Jason Gabelman at Cowen wrote in a note to clients. The stock had soared 25.3% in October.

Exxon Mobil reported third-quarter net income that rose 191.3% to $19.66 billion from $6.75 billion, as earnings per share increased to $4.68 from $1.57.

Chevron's net income grew 83.8% to $11.23 billion from $6.11 billion, as EPS rose to $5.78 from $3.19.

Excluding nonrecurring items, adjusted EPS for Exxon Mobil rose to $4.45 from $1.58 to beat the FactSet consensus of $3.86, and for Chevron increased to $5.56 from $2.96 to top expectations of $4.89.

Revenue climbed 51.9% for Exxon Mobil to $112.07 billion, well above the FactSet consensus of $104.59 billion, and hiked up 49.1% for Chevron to $66.64 billion to beat expectations of $57.36 billion.

In Exxon Mobil's upstream business, which encompasses the exploration and production of crude oil and natural gas, oil-equivalent production was 3.7 million barrels per day, up by more than 50,000 barrels per day in the sequential second quarter.

Upstream net income increased by $1 billion to $12.4 billion. Natural gas realizations rose 22%, while crude realizations fell 12%.

"In the third quarter, crude prices moved back within the upper end of the 10-year range as higher supply slightly exceeded demand," CEO Woods said. "Natural-gas prices rose to record levels in the third quarter, reflecting concerns in Europe about the withdrawal of Russian supply, as well as efforts to build inventory ahead of winter."

In Exxon's downstream business, which includes the refining and delivery of products, energy products earnings rose 9.4% from last year to $5.8 billion, helped along by "strong" refining margins amid high global diesel demand. Refining throughput per day was up 177,000 barrels from the sequential second quarter to 4.2 million barrels, which Exxon boasted as being "the best-ever quarterly refining throughput in North America and the highest globally since 2008."

For Chevron, U.S. upstream earnings rose 73.5% to $3.40 billion, amid higher realizations and higher volumes, while international upstream jumped 86.4% to $3.40 billion as higher realizations offset lower sales volumes.

The average sales price per barrel of crude oil and natural gas liquids rose 31% from a year ago to $76 in the U.S. and increased 31% to $89 internationally. For natural gas, the average sales price soared 117% in the U.S. to $7.05 per thousand cubic feet, and grew 65% internationally to $10.36 per thousand cubic feet.

In Chevron's downstream business, U.S. earnings increased 19.4% to $1.29 billion and international earnings rocketed 446.3% to $1.24 billion.

Free cash flow rose 144% to $22.05 billion for Exxon, and increased 83.6% for Chevron to $12.3 billion.

Exxon Mobil's stock has run up 80.9% year to date and Chevron's has rallied 53.4%. Over the same time, the SPDR Energy Select Sector exchange-traded fund (XLE) has advanced 60.8% and the Dow Jones Industrial Average has lost 9.6%.

Separately, Exxon Mobil said it increased its quarterly dividend by 3.4% to 91 cents a share, with the new dividend payable Dec. 9. Based on current stock prices, the new annual dividend rate implies a dividend yield of 3.34%, which compares with Chevron's current yield of 3.20% and the implied yield for the S&P 500 index of 1.72%.

Exxon CEO Woods also commented on Russia's decrees to "unilaterally" terminate Exxon's Sakhalin-1 and to transfer the project to a Russian operator. The company had said in March that it was "beginning the process" to discontinue operations and exit the Sakhalin-1 venture.

Woods said the decrees "violate our rights in Russia," and interrupted the exit process, but didn't prevent the company from winding down operations.

-Tomi Kilgore

(END) Dow Jones Newswires

10-31-22 0803ET

Copyright (c) 2022 Dow Jones & Company, Inc.

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2022-10-31 12:03:00Z
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