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Oil giants Chevron and ExxonMobil reported huge profits during the second quarter 2022

Autor: Financial Market
Timp de citit: 3 minute

US oil&gas companies Chevron and ExxonMobil posted record quarterly profits, driven higher by soaring prices for oil and natural gas.

Chevron Corporation (NYSE: CVX) reported earnings of $11.6 billion ($5.95 per share – diluted) for second quarter 2022, compared with $3.1 billion ($1.60 per share – diluted) in second quarter 2021.

Included in the current quarter were charges associated with an early contract termination of $600 million and a gain on asset sales of $200 million, while the foreign currency effects increased earnings by $668 million.

Adjusted earnings of $11.4 billion ($5.82 per share – diluted) in second quarter 2022 compares to adjusted earnings of $3.3 billion ($1.71 per share – diluted) in second quarter 2021.

Sales and other operating revenues in second quarter 2022 were $65 billion, compared to $36 billion in the year-ago period.

“Second quarter financial performance improved as we delivered a return on capital employed of 26 percent,” said Mike Wirth, Chevron’s chairman and chief executive officer. The company also strengthened its balance sheet, lowering its debt ratio to under 15 percent, and increased the top end of its annual share repurchase guidance range to $15 billion.

Also, the company more than doubled investment compared to last year to grow both traditional and new energy business lines, with Permian production more than 15 percent higher than a year ago and now as one of the leading renewable fuel producers in the United States.

This investment includes total capital and exploratory and acquisition-related expenditures as Chevron closed its acquisition of Renewable Energy Group, Inc. and completed the formation of a renewable fuels joint venture with Bunge North America, Inc. Also during the second quarter, the company sanctioned the Ballymore project in the deepwater U.S. Gulf of Mexico, which is expected to require a gross investment of approximately $1.6 billion.

The field is planned to be produced through an existing facility with allocated capacity of 75,000 barrels of crude oil per day.

The company also advanced its carbon capture and storage (CCS) business this quarter by launching a CCS project aimed at reducing the carbon intensity of its upstream operations in California and forming an expanded joint venture to develop the Bayou Bend CCS hub in Texas, with the goal of it becoming one of the first offshore CCS projects in the United States.

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Further, leveraging the company’s growing U.S. natural gas production and its global liquefied natural gas (LNG) value chain, Chevron signed agreements to export 4 million tonnes per year of LNG out of the U.S. Gulf Coast, commencing in 2026.

The company’s average sales price per barrel of crude oil and natural gas liquids was $89 in second quarter 2022, up from $54 a year earlier. The average sales price of natural gas was $6.22 per thousand cubic feet in second quarter 2022, up from $2.16 in last year’s second
quarter.

Chevron earnings. Source: Company earning release

Same time, Exxon Mobil Corporation announced estimated second-quarter 2022 earnings of $17.9 billion, or $4.21 per share assuming dilution. Second-quarter results included a favorable identified item of nearly $300 million associated with the sale of the Barnett Shale Upstream assets. Capital and exploration expenditures were $4.6 billion in the second quarter and $9.5 billion for the first half of 2022.

Financial Highlights
• Second-quarter earnings of $17.9 billion compared with $5.5 billion in the first quarter of 2022. Excluding identified items, earnings of $17.6 billion increased $8.7 billion from the prior quarter, driven by a tight supply/ demand balance for oil, natural gas, and refined products, which have increased both natural gas realizations and refining margins well above the 10-year range.
• Cash increased by $7.8 billion in the second quarter, as strong cash flow from operating activities more than covered capital investments and shareholder distributions. Free cash flow in the quarter totaled $16.9 billion. Shareholder distributions were $7.6 billion for the quarter, including $3.7 billion of dividends.
• Net-debt-to-capital ratio improved to 13% reflecting a period-end cash balance of $18.9 billion. The debt-tocapital ratio was 20%, at the low-end of the company’s target range.
• Effective April 1, to improve the effectiveness of operations and to better serve customers, the Corporation formed ExxonMobil Product Solutions, combining world-scale Downstream and Chemical businesses. The company also centralized Technology & Engineering and Operations & Sustainability groups to further capture the benefits of technology, scale, and integration. The company has changed its segment reporting to reflect the new structure.

ExxonMobil earnings. Source: Company earning release