Exxon pockets US$9.1B in profits for 3rd quarter

Oct 28, 2023 ExxonMobil, News, Oil & Gas

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…attributes upstream earnings to favourable tax impacts, higher crude prices

Kaieteur News – ExxonMobil, the leading U.S. Oil Company, and operator of Guyana’s Stabroek Block, announced impressive third-quarter 2023 profits of US$9.1 billion on Friday. Cash flow from operations was US$16.0 billion, up US$6.6 billion versus the second quarter.

Darren Woods, Chairman and Chief Executive Officer (CEO) of ExxonMobil, commented on their strong performance, stating, “We delivered another quarter of strong operational performance, earnings, and cash flows, adding nearly 80,000 net oil-equivalent barrels per day to support global supply. The organization’s relentless focus on safety, environment, and value is paying off, driving record refining throughputs, delivering major projects at first-quintile cost and schedule, and surpassing planned structural cost savings while reducing emissions and environmental impact.”

Exxon reported earnings of US$9.1 billion for the quarter, compared to second-quarter earnings of US$7.9 billion. This improvement was attributed to robust operating performance, including record third-quarter refining throughput, along with higher crude prices and a favourable industry refining margin environment. However, weaker chemical margins, unfavourable derivative mark-to-market impacts, and timing effects in trading, which are expected to unwind over time, partly offset these positive factors.

In comparison to the same quarter in the previous year, earnings witnessed a decrease of US$6.3 billion – the oil company said. Excluding identified items, earnings were down by US$5.7 billion, primarily due to a nearly 60% decline in natural gas realizations and a 14% drop in crude realizations. However, Exxon said that excluding the effects of divestments, entitlements, and government-mandated curtailments, net production increased by approximately 80,000 oil-equivalent barrels per day, driven by operations in the Permian and Guyana.

Year-to-date earnings for Exxon stood at US$17.2 billion, representing a decrease of US$11.1 billion compared to the first nine months of 2022. The prior year’s period was impacted by net negative identified items totaling US$2.4 billion, including an identified item associated with the Sakhalin-1 expropriation. Excluding these identified items, earnings dropped by $13.3 billion.

However, according to the company, higher production from advantageous projects in Guyana and the Permian partly offset the lower crude and natural gas realizations.

Exxon also reported that year-to-date production reached 3.7 million oil-equivalent barrels per day, with an improving portfolio mix that saw increased liquid production from Guyana and the Permian, offsetting the decline in natural gas production due to divestments.

Notably, earlier this month, ExxonMobil announced its plans to merge with Pioneer Natural Resources in a US$59.5 billion all-stock transaction. This merger is expected to yield double-digit returns, recover more resources efficiently, and accelerate emissions reductions.

Exxon emphasized in its statement that upstream earnings for the third quarter reached US$6.1 billion, marking a substantial increase of US$1.5 billion from the second quarter. This growth was driven by higher crude prices, reduced scheduled maintenance, and favorable tax impacts, although identified items did unfavourably impact earnings by US$14 million during the quarter.

ExxonMobil Guyana is the operator and holds 45 percent interest in Guyana’s lucrative Stabroek Block, which is 6.6 million acres and has 11 billion of proven barrels of oil. Hess Guyana Exploration Ltd., which recently announced its sale to U.S. oil major Chevron Corporation, holds 30 percent interest and CNOOC Petroleum Guyana Limited holds 25 percent interest.

Exxon and its co-ventures made its first discovery in the block back in 2015 and by December 2019 moved into production phase.  The oil companies already sanctioned five US-multi-billion projects in the Stabroek Block with an investment of over US$50 Billion that they will recover from Guyana’s oil resources. They are currently pumping about 400,000 barrels oil per day with hopes to reach one million bpd by 2029. Exxon is preparing to sanction its sixth oil project in the Stabroek Block.

In line with their strategic plans, they reported capital and exploration expenditures of US$6.0 billion for the third quarter, bringing the year-to-date 2023 expenditures to US$18.6 billion. The full-year capital and exploration expenditures are expected to fall at the upper end of the guidance range of US$23 billion to US$25 billion, as the company actively pursues valuable opportunities. Also, Exxon maintains a debt-to-capital ratio of 17% and a net-debt-to-capital ratio of 4%, reflecting a period-end cash balance of US$33.0 billion.

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• Chairman and Chief Executive Officer (CEO) of ExxonMobil, Darren Woods, higher, Stabroek Block, tax impacts

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