Profits at ExxonMobil and Chevron fell from record highs in the first quarter, but still beat Wall Street forecasts even as a slowing economy began to hit energy markets.
Exxon made $11.4bn in profit in the first three months of the year, down 11 per cent from the final quarter of 2022. Rival Chevron reported earnings of $6.6bn, driven by strong margins in its fuel sales business.
“It was a record first quarter coming after a record year and that’s despite the fact that energy prices came down,” said Kathy Mikells, Exxon’s chief financial officer. Analysts had expected the group to report profits of $10.3bn.
The Texas-based oil major took a roughly $200mn charge in the quarter related to windfall taxes Europe imposed after Russia’s full-scale invasion of Ukraine sent energy prices higher. The group is suing the EU in a bid to get the levy scrapped, arguing that Brussels overstepped its legal authority in introducing the new tax.
The robust results come as crude and natural gas prices have fallen in recent weeks on fears that central banks’ efforts to tame inflation will hit the economy and ultimately undermine the recovery in global oil demand.
Brent crude, the global price benchmark, is trading around $78 a barrel, well below last year’s highs and roughly where it was when Opec+ announced a surprise production cut earlier this month to support prices.
Pierre Breber, Chevron’s chief financial officer, said he still expected oil markets to pick up in the second half of the year as China’s economic reopening drove crude demand higher and supplies remained tight.
“Opec+ made additional cuts, so clearly they’re acting with discipline, inventories are generally below average and most producers are showing capital discipline just like ourselves,” he said.
Even with energy markets cooling off, the companies remain more profitable than they have been in years as they keep a tight grip on spending, and have rewarded investors with higher dividends and larger share buybacks.
That decision has drawn a political backlash from US president Joe Biden who has accused the oil companies of “war profiteering” and failing to raise supplies to keep a lid on prices, although the industry has insisted it can still increase output at the lower spending levels.
Exxon said on Thursday that it had made a final investment decision to move ahead with a huge $12.7bn oil project known as Uaru in deep waters off of Guyana, which will pump as much as 250,000 barrels a day of oil and gas.
It is part of a development led by Exxon off the tiny South American country’s coast, where more than $40bn in investment is planned, that could bring Guyana’s total oil production to more than 1mn b/d later this decade, more than many Opec nations.
French oil major TotalEnergies on Thursday posted a first-quarter profit of $6.5bn, in line with expectations but down from $9bn in the same period last year. BP will announce its results on Tuesday and Shell reports on Thursday.