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ExxonMobil and Chevron, the two largest US oil companies, announced strong earnings and cash flow gains for the third quarter, boosted by the rebound in oil and gas prices and strong shale activity. in the USA.
Solid earnings, which outpaced analysts' expectations, followed similar profits from European oil groups, including BP and Royal Dutch Shell, for the same period.
For Exxon and Chevron, this quarter was the strongest in terms of cash generation since the fall in crude prices in the second half of 2014.
The two companies announced rapid output growth in the Permian Basin in Texas and New Mexico, at the heart of the recovery of the shale boom in the United States, and announced their continued expansion.
They also said that their oil and gas production in the United States, which had lost money in the third quarter of 2017, had resulted in substantial profits.
The results suggest that the two companies' investment in the Permian Basin is starting to pay off. Exxon's oil production in the region increased 57% in the third quarter compared to the same period in 2017, while Chevron's was up 80%.
Pat Yarrington, Chief Financial Officer of Chevron, said the company added 150,000 barrels a day of production, which equates to the creation of a brand new mid-sized exploration and production company "in a matter of months".
Jack Williams, Exxon's vice president of oil and gas production, said the company was building treatment plants and other facilities in the Permian region to "allow us long-term to have a very competitive exploitation.
Earnings per share of Exxon was $ 1.46, up 57% over the previous year, while Chevron's was $ 2.11, about double its level over the period equivalent of 2017.
Chevron said it would use some of its cash for a modest $ 750 million stock repurchase program, or about 0.3% of its market capitalization. Exxon has stated that it "does not currently provide" for share repurchases.
Analysts expect cash flow to remain strong, which could create a buy-back capacity or stronger dividend growth.
CFRA's Stewart Glickman has raised his expectations for Exxon's profits this year and in 2019, adding that "the potential for operating cash flow remains very high."
Chevron has announced an increase in production, with production increasing by 9% per year to 2.96 million barrels of oil equivalent per day, a rare increase for an oil company of this size. Oil and gas production in the United States increased by 22%.
Exxon production fell 2% to 3.8 million boe / d, but general manager Darren Woods said the situation was beginning to reverse, thanks in part to strong Permian activity .
Exxon's oil and gas production in the United States, which recorded a $ 238 million loss in the third quarter of 2017, generated a profit of $ 606 million. Outside the United States, earnings from oil and gas production nearly doubled to $ 3.62 billion.
For Chevron, oil and gas production in the United States has gone from a loss of $ 26 million in the third quarter of 2017 to a profit of $ 828 million for the same period of 2018, even after a charge of $ 550 million for a write-down of a sector project. Gulf of Mexico. Outside the United States, profits have increased five-fold to $ 2.55 billion.
According to Exxon, the strength of shale oil and gas production in North America also contributed to its refining operations and the results showed "the benefits of integration". Group profits at US refineries more than doubled to $ 961 million.
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