Exxon Mobil Posts Adjusted Earnings of $17.5 Billion as Refining Margins Surge
Key Facts
Exxon Mobil and Chevron reported third-quarter results on October 30 that beat analysts’ expectations, benefiting from higher prices and record production, according to the Associated Press. Exxon reported earnings of $15.4 billion, or $3.72 per share, while adjusted earnings reached $17.5 billion, or $4.23 per share. Chevron reported earnings of $9.9 billion, or $5.06 per share, and adjusted earnings of $10.4 billion, or $5.28 per share. The results highlight refining’s role in supporting major oil companies’ profits in a quarter marked by volatile crude prices and disrupted fuel supplies. The results alone do not establish how the entire energy sector performed, but they offer a picture of two of the largest U.S. oil producers.
Exxon’s adjusted earnings of $4.23 per share exceeded the average analyst estimate of $4.08 compiled by LSEG, according to Reuters. The Associated Press reported that the company’s revenue rose 33% to $113.16 billion in the three months ended in September. The agency put the average analyst estimate for adjusted earnings at $4.12 per share, higher than the LSEG figure cited in Reuters’ report. Meanwhile, Exxon’s adjusted earnings from refining and marketing rose to $9 billion, up 120% from the previous quarter, as refining margins improved. Reuters said the increase in downstream earnings was driven by higher margins, making it harder to distinguish refining performance from exploration and production in interpreting the company’s results.
Refinery operations underscored Exxon’s refining strength: utilization of its crude units at U.S. Gulf Coast refineries reached 100% in the third quarter, Reuters reported. Diesel output there reached its second-highest level on record. At Chevron, revenue rose 36% to $67.8 billion, and U.S. refineries processed more than 1 million barrels of crude a day, according to the Associated Press. The company said utilization at its U.S. refineries was 98% and its U.S. production had risen 27% from two years earlier. The figures show differing sources of support for the two companies: high refining utilization at both, alongside an increase in Chevron’s domestic production.
The refining surge extended to Phillips 66, which reported adjusted earnings of $5.619 billion in the third quarter on October 28, compared with $3.788 billion in the second quarter. Its adjusted refining earnings rose to $6.060 billion from $3.086 billion in the previous period. Refining capacity utilization was 98%, compared with 96% in the second quarter, according to the company’s statement. The quarter-on-quarter comparison places refining at the center of the company’s improvement, but does not provide a basis for generalizing the trend to all energy companies’ results. The three companies’ reports therefore carry different implications: Exxon and Chevron’s figures combine overall earnings with operational drivers, while Phillips 66’s data highlight changes in refining earnings and utilization.
Reuters linked improved refining earnings at Exxon and Chevron to higher fuel-processing margins amid disruption in energy markets and wars. Spot Brent prices ranged from $68 to $132 a barrel during the quarter, according to a Chevron finance official, reflecting market volatility. Reuters reported that gasoline and diesel prices rose amid supply disruptions, while repairing damaged refineries could take time before margins return to typical levels. In this context, Chevron Vice Chairman Mark Nelson said, "Margins will remain slightly above normal, and that may continue into next year." The comments tie the continued strength in refining earnings to operational and geopolitical developments, without specifying when margins will return to typical levels.
The results were reflected in trading on Friday, October 30, with Exxon and Chevron shares each rising about 2%, in line with the S&P 500 energy sector index, despite declines in Wall Street’s major indexes, Reuters reported. An earlier Reuters report had cited a 2% rise in Exxon shares and a 1% gain in Chevron shares in premarket trading, before a later report put both stocks’ gains at about 2% during Friday trading. Exxon said a discussion of its third-quarter results via an investor webcast was scheduled for October 30 at 8:30 a.m. Central Time. On the operational outlook, Nelson said refining margins could remain slightly above normal, perhaps into next year. Reuters linked a return to more typical margins to the end of conflicts and repairs to damaged refineries, noting that this could take time.