Surging Chevron, Exxon
profits signal oil industry turnaround
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[May 01, 2017]
By Ernest Scheyder
HOUSTON
(Reuters) - Rising crude prices helped Chevron Corp and Exxon Mobil Corp
easily beat analysts' quarterly profit expectations on Friday, setting
an upbeat tone as the two companies press ahead with shale oil
expansions.
While cost cuts and asset sales provided a boost to both companies, the
results highlighted the slowly improving dynamics for the energy
industry as oil prices have climbed more than 50 percent since early
2016.
First-quarter results were especially robust at Exxon, with quarterly
profit more than doubling to $4.01 billion, even as production fell 4
percent.
Chevron swung to a $2.68 billion quarterly profit and turned cash flow
positive, earning more than it spent, a milestone Wall Street analysts
had long sought. Cash flow should continue to rise further, Chief
Financial Officer Pat Yarrington told investors on a Friday conference
call.
Chevron's results were helped by $2.1 billion in asset sales. The
company has sold more than $5 billion in assets since last year and is
seeking buyers for its Canadian oil sands business, sources have told
Reuters.
If Chevron sells the business, "we'd want to make sure we got full value
for it," Yarrington said.

Shares of both Exxon and Chevron rose less than 1 percent in afternoon
trading as U.S. oil prices traded flat near $49 per barrel.
Their energy peers, BP Plc and Royal Dutch Shell Plc, are set to report
quarterly results next week.
Looming over the large international oil companies, though, is
uncertainty over whether the Organization of the Petroleum Exporting
Countries will extend a production cut past June when it meets next
month in Vienna. Should the cut not be continued, oil prices would
likely drop, pushing the sector back into recession.
'NEED TO BE CAUTIOUS'
Jeff Woodbury, Exxon's head of investor relations, said while the
company believes underlying global oil demand remains strong, high
inventories and new supplies coming into the market "indicates a need to
be cautious."
Chevron and Exxon expanded production in their American shale portfolios
during the quarter, with both deciding the low-cost fields offered an
easy opportunity to boost profit. They have laid out plans to increase
drilling in those fields this year.
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The logo of Chevron Corp is seen in its booth at Gastech, the
world's biggest expo for the gas industry, in Chiba, Japan April 4,
2017. REUTERS/Toru Hanai

Chevron, the second largest leaseholder in the Permian Basin, which is the
largest American oilfield, has devoted much of its 2017 capital budget to shale
projects. Chief Executive Officer John Watson told Reuters earlier this month
the Permian was vital to Chevron's growth.
Exxon doubled its acreage holdings in the Permian Basin of West Texas earlier
this year in a deal worth up to $6.6 billion. It was the U.S. oil industry's
largest deal in the first quarter, and Exxon said it plans to drill its first
well on the acreage soon.
"We see unique value that we're going to bring to that Permian acreage,"
Woodbury said on a conference call with investors on Friday.
In Asia, both companies expanded liquefied natural gas operations. Chevron
brought a third processing facility online at its Gorgon LNG project in
Australia, and Exxon bought InterOil in a $2.5 billion deal to expand in Papua
New Guinea.
Chevron still expects the Wheatstone LNG project in Australia to come online by
the middle of the year, executives said.
Exxon also bought a 25 percent stake in a Mozambique gas field last month in a
deal worth up to $2.8 billion.
(Editing by Gary McWilliams, Jeffrey Benkoe and Bernadette Baum)
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