Exxon and Chevron Post Blowout Quarters as Refining Margins Surge
Both oil giants beat Wall Street's estimates Friday, with Exxon's downstream business posting a 120% jump in earnings as refining margins widen worldwide.
ExxonMobil and Chevron both posted third-quarter earnings well ahead of Wall Street's expectations Friday, as a surge in refining margins helped offset softer results from their core drilling operations.
Exxon reported GAAP net income of $15.4 billion, or $3.72 per share, with adjusted earnings of $17.5 billion, or $4.23 per share, according to the company's own third-quarter release. The company generated $25.7 billion in operating cash flow and $19.1 billion in free cash flow, and returned $9.4 billion to shareholders through $4.3 billion in dividends and $5.1 billion in share buybacks.
Refining does the heavy lifting
The standout number was downstream: Exxon's Energy Products, Chemical and Specialty segments together posted GAAP earnings of roughly $9.2 billion, powered by refining margins that widened sharply amid supply disruptions tied to the Iran conflict and Ukrainian strikes on Russian refineries. Exxon's adjusted downstream earnings alone jumped 120% from the prior quarter. Upstream output held essentially flat at 4.5 million barrels of oil equivalent per day. "We're increasing production while improving efficiency," chief executive Darren Woods said in the release. The company declared a fourth-quarter dividend of $1.07 per share, payable December 10.
REFINING MARGINS WIDENED SHARPLY.
Chevron told a similar story. The company reported net income of $9.92 billion, or $5.06 per share, topping a Zacks consensus estimate of roughly $4.78 a share; on an adjusted basis, earnings came in at $5.28 per share. Revenue of $67.8 billion also beat forecasts, according to an Associated Press earnings snapshot. Chevron declared a quarterly dividend of $1.78 per share, payable December 10.
The twin beats come as oil majors have spent much of the year fending off questions about softer crude prices by leaning on their refining and chemicals businesses, which tend to benefit when supply disruptions elsewhere in the world squeeze fuel markets. Both companies have also kept up aggressive shareholder-return programs even as they continue to invest in production growth, a balancing act investors have rewarded with shares near record territory heading into Friday's results.
Shares of both companies were higher in premarket trading following the releases, extending a rally that has lifted the broader energy sector over the past month.