High Refining Margins Push Exxon to Record Quarterly Profit


Exxon Mobil (NYSE:XOM) gained 2.2% pre-market on Friday after handily exceeding expectations for Q2 adjusted earnings and revenues and benefiting from increased demand and rising oil and natural gas prices.

Exxon reported its highest-ever quarterly net earnings of $17.85 billion, or $4.21 per share, more than doubling the $4.69 billion, or $1.10 per share, earned during the corresponding period in 2017.

Chevron (NYSE:CVX), a rival, also reported a record quarterly profit of $11.6 billion, up from $3.1 billion in the same quarter last year.

Factors Behind Record-Breaking Quarter

Due to increasing production, greater realizations and margins, and effective cost control, Exxon’s (NYSE:XOM) Q2 total revenue climbed by 71 percent to $115.68B from $67.74B a year ago, while cash flow from operating activities reached $20B.

With $18.9 billion in cash on hand at the end of the second quarter, the net debt ratio improved to 13 percent.

The business reported that it raised Permian oil and gas production by about 130K boe/day to 550K boe/day and refining throughput by 180K bbl/day from H1 2021 to meet rising product demand. Q2 worldwide net production grew 4 percent Y/Y to 3.73M boe/day.

As a result of limited supply, Q2 upstream profitability grew to $11.4 billion from $4.5 billion in Q1; petroleum realizations increased by 15% and gas realizations by 23%.

Refinery Utilization Pushes Profits Higher

Energy Products reported $5.3 billion in earnings in Q2 compared to losses in Q1 and the same period a year prior because the quarter’s high refinery utilization resulted in higher industry margins.

Earnings for Chemical Products in Q2 decreased from $1.4B in Q1 to $1.1B.

The total capital and exploration expenditures for Q2 and H1 were $4.6 billion and $9.5 billion, respectively, staying within the full-year range.

The industry’s biggest single capacity expansion in the U.S. since 2012, according to Chairman and CEO Darren Woods, will be a 250K barrel/day increase in refining capacity in the first quarter of 2023.

Exxon’s (XOM) stock price return indicates a YTD gain of 46% and a yearly increase of 59%.

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