Exxon Mobil profit sinks, Chevron rises as both boost output
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[August 03, 2019] By
HOUSTON (Reuters) - Weaker second-quarter refining and chemicals profits
offset surging U.S. shale production at U.S. oil majors Exxon Mobil Corp
<XOM.N> and Chevron Corp <CVX.N>, the two reported on Friday.
Exxon's topped analysts' reduced estimates for the quarter but net fell
21% from a year earlier, its third quarter in a row of weaker
year-over-year profit, despite a near doubling in Permian shale oil
Chevron earnings rose 26%, in line with forecasts, as it benefited from
a one-time, $1-billion breakup fee from Anadarko Petroleum <APC.N>,
which accepted a higher bid from Occidental Petroleum <OXY.N> after
agreeing to sell itself to Chevron.
Shares of both companies fell on Friday with Exxon off 1% at $71.75 a
share and Chevron down a penny at $120.73 as the market fell on
U.S.-China trade concerns.
Exxon's weaker earnings mirrored those at rivals Royal Dutch Shell <RDSa.L>
and Total SA <TOTF.PA>, and both U.S. companies said natural gas prices
and chemical margins fell from a year-earlier.
Shell's profit was its smallest in 30 months, due to weaker chemicals,
refining and tumbling natural gas prices. Total also cited weaker
natural gas and refining operations for earnings that fell 19% from a
Exxon's net income fell to $3.13 billion, or 73 cents per share, in the
second quarter, from $3.95 billion, or 92 cents per share, last year.
Analysts had slashed their estimates last month after the company
disclosed weaker results in natural gas, chemicals and refining.
"Pretty weak quarter from them once again," said Jennifer Rowland,
analyst with Edward Jones. After spending on major projects and
dividends, Exxon had a free cash flow shortfall of $2.7 billion, she
said. Investors closely watch that measure as a sign of the company's
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Exxon's chemicals business fell to a loss in the United States for the first
time in at least three years and earnings have declined for five quarters in a
row. It collected lower profits from refining due to higher costs and lost
production at several plants.
The largest U.S. oil producer by volume has been investing in major projects to
boost production at a time when investors have been pressing oil companies to
cut spending and increase returns to shareholders.
In a call with analysts, Exxon Senior Vice President Neil Chapman said despite
weak market conditions in three of the company's businesses, "on the whole, our
businesses performance extremely well."
He pointed to the company's 90% year-over-year in Permian production and a 7%
overall increase in its oil and gas production.
Exxon remains on track to increase its drilling in the top U.S. shale field and
had its "eyes wide open" for potential acquisitions there, Chapman said. It
remains committed to selling about $15 billion in assets through 2021, although
proceeds this year have totaled $140 million, down from $1.75 billion a year
Chevron's Permian Basin production rose 50% from the same period a year ago and
is overall output hit 3.08 million barrels per day, up 9% from a year ago and a
Chevron does not "need to do a deal" in the Permian, said Pierre Breber, chief
financial officer, who noted that the company has moved in the past when it saw
(Reporting by Jennifer Hiller, Arathy S Nair in Bengaluru; editing by Bernard
Orr, Nick Zieminski, Bernadette Baum and Diane Craft)
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