Nov. 02–Big Oil companies reported their best financial quarter in four years this week as they raked in multibillion-dollar profits, in some cases doubling them from the previous year.
Exxon Mobil, the nation’s biggest oil company, said Friday that it boosted its third-quarter profit by almost 60 percent from a year ago, to more than $6.2 billion. Chevron doubled its earnings to $4 billion.
Earlier this week, Royal Dutch Shell said it earned a $5.8 billion profit in the third quarter, up nearly 50 percent from $4 billion last year, and its quarterly revenues surpassed $100 billion for the first time since 2014 when oil prices were still near $100 a barrel. The British oil major BP said its third quarter profits nearly doubled to almost $3.4 billion.
The companies benefited not only from higher oil prices and production, but also soild earnings from refining and chemical operations. Exxon Mobil, for example, said it earned $2.3 billion from refining and chemicals, while Chevron earned $1.4 billion from these operations.
“The integrated (Big Oil) firms are all operating pretty well right now,” said Brian Youngberg, a senior energy analyst at Edward Jones in St. Louis. “They’re figuring out how to operate in a cyclical industry under more pressure than ever”
Nearly all the oil majors have significant operations in the Houston area, and their strong earnings should help support the region’s economy, which only recently has gained momentum following the oil bust that lasted roughly from 2014 to 2016, said Patrick Jankowski, senior economist for the Greater Houston Partnership. Job growth here is on the upswing, while activity generated by the energy industry is on the rise across the state, from the booming Permian Basin in West Texas to Beaumont and Port Arthur in southeast Texas, where companies such as Exxon Mobil and the French oil major Total are investing billions in refining and petrochemical projects.
The surge in profits “signals the industry is out of the doldrums and on the expansion track,” said Jankowski. “You’re seeing some hiring, but maybe not a substantial spree. It definitely means there’s less pressure for layoffs.”
Oil companies slashed jobs during the oil bust as crude prices dove to $26 a barrel in early 2016. They have since risen above $75 as recently as a month ago, but concerns over growing supplies and a slowing global economy have sent prices back below $65 a barrel. Oil settled Friday at $63.14 in New York, down 55 cents.
Chevron said Friday that its Permian production jumped 80 percent in a year, and the company reiterated its interest in buying or building an oil refinery in the Houston area to help process all of that crude. Its petrochemical joint venture, ChevronPhillips, is considering another massive expansion in the Houston area after just completing one in Baytown early this year.
Exxon Mobil said its production in the third quarter rose to 3.8 million barrels of oil equivalent rose from 3.6 million in the second quarter, although volumes were still down about 2 percent from the third quarter of 2017. Exxon’s year-over-year production has declined in nine of the last 10 quarters.
“Exxon is stabilizing, but it’s taken two-and-a-half years,” said Pavel Molchanov, energy analyst with Raymond James.
Exxon Mobil is focused on its holdings in the Permian Basin, where it operates 38 drilling rigs. After just finishing a big petrochemical expansion this summer in Baytown and Mont Belvieu, Exxon is advancing a new chemicals and plastics plant outside of Corpus Christi. The company also plans to launch a refining expansion in Beaumont. Those projects will all consume oil and gas from the Permian.
Chevron’s stock rose more than 3 percent Friday to $114.73 a share. Exxon stock climbed nearly 2 percent to $81.95 a share.
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