Exxon (XOM), Chevron (CVX) profits soar on strong demand

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Exxon (XOM), Chevron (CVX) profits soar on strong demand

 Exxon (XOM), Chevron (CVX) profits soar on strong demand
Image source: OSORIOartist,Shutterstock

Highlights

  • Exxon Mobil (NYSE: XOM) net earnings were US$6.8 billion in Q3 2021 against a net loss of US$680 million a year ago.
  • Exxon produced 3.7 million barrels per day of oil equivalents in the quarter.
  • Chevron Corp (NYSE: CVX) posted revenue of US$44.7 billion, up 87% YoY, in the quarter. 

Energy giants Exxon Mobil (NYSE: XOM) and Chevron Corp (NYSE: CVX) on Friday reported strong third-quarter revenue growth, helped by robust demand and operational performance.

The XOM stock traded at 1.38% higher to US$65.20, while the CVX stock traded at 1.49% higher to US$114.80 in pre-market at around 8:22 am ET.

Third-quarter Highlights

Exxon Mobil Corporation 

Exxon posted total revenue and other earnings of US$73.79 billion in the quarter, up 60% YoY.

Its net earnings were US$6.8 billion against a net loss of US$680 million a year ago, helped by increased demand and robust operations.

The Upstream segment earnings were US$3,951 million; Downstream was US$1,255 million; and Corporate segment earnings were US$2,140 million. 

In the Upstream segment, crude oil average realization increased 7%, and natural gas realization grew 28% QoQ. In Downstream, the refining output increased 5% sequentially from the second quarter due to high demand and lower maintenance activity. The chemical segment also saw strong demand, fulfilled by Exxon’s supply and logistics flexibility measures.

Also Read: Merck (MRK), Sanofi (SNY) raise profit guidance after solid Q3 results

The earnings per share diluted was US$1.57, an improvement over the loss per share diluted of US$0.15 in the third quarter of 2020. The company produced 3.7 million barrels per day of oil equivalents in the third quarter of 2021.

The company has reduced debt by US$11 billion YTD and plans to keep the debt within the range of 20% to 25% to secure an investment-grade credit rating, it said in a release. 

Exxon has been paying dividends for several years, maintaining 39 years of consecutive growth. It increased the fourth-quarter dividends to US$0.88 per share. The energy company plans to increase technology investments to lower emissions and carbon footprint. 

Also Read: Caterpillar (CAT), Illinois (ITW) report solid revenue growth in Q3

Projection

The anticipated cumulative emission investment is US$15 billion from 2022 to 2027. The company said it is on track to achieve its 2025 emission reduction target.

It expects capital investment to be in the range of US$20 billion to US$25 billion annually. Exxon also plans to repurchase shares up to US$10 billion in 12-24 months, starting from 2022. 

The Irving, Texas-based company has a market capitalization of US$272 billion, a P/E ratio of 12.79 and a dividend yield of 5.43%. 

Also Read: Yum! (YUM) beats profit estimates, Hershey (HSY) raises guidance

Q3 Earnings: Exxon Mobil Corporation (NYSE: XOM), Chevron Corporation (NYSE: CVX).

Also Read: Stripe bets big on carbon-capture, offers US$1 mn reward for achievers

Chevron Corporation 

Chevron posted sales and other operating revenues of US$44.7 billion in the third quarter ended September 30, 2021, compared to US$24.45 billion, reflecting an 87% increase YoY. 

Its net income was US$6.1 billion compared to a net loss of US$207 million in the third quarter of 2020. The EPS diluted for Q3, 2021 was US$3.19 compared to a net loss per share diluted of US$0.12 for the same period a year ago.

The adjusted earnings were US$5.7 billion or US$2.96 per share diluted in Q3, 2021. Its cash flow from operation was US$8.6 billion, and free cash flow was US$6.7 billion in the September quarter this year. In addition, the company repurchased shares of US$625 million and paid a dividend of US$2.6 billion while reducing its debt by US$5.6 billion. 

Chevron’s Upstream expenditure was around 84% in 2021. Its capital and exploration expenditures were US$8.1 billion in the first nine months of 2021 compared to US$10.3 billion in the previous year. 

The San Ramon, California-based Chevron is an integrated energy company. It is the second-largest oil company in the US and produces crude oil, natural gas, and refinery products like transportation fuels, lubricants, and additives. It has a market capitalization of US$221 billion. Chevron’s P/E ratio is 61.28, and the dividend yield is 4.78%. 

Also Read: US stocks rally after economic data

Bottomline

Exxon reported a strong cash flow this quarter. Exxon Chairman and CEO Darren Woods said: “increased realizations and improved demand” for fuels lifted the quarterly performance. Likewise, Chevron CEO Mike Wirth said improved market conditions, robust operations, and lower cost structure helped improve the performance. Investors, however, must exercise due diligence and analyze the stocks before investing in them.  

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