The rising price of natural gas and oil boosted profits for the third quarter at Chevron Corp. and Exxon Mobil Corp. by nearly 50%, which underscores the reliance they have on the commodity.
Even with deep spending cuts and refocusing on project which can generate paybacks quicker over recent years. Friday’s results showed that the two oil giants, neither of whom hedges their oil output, remain at the mercy of the volatile price fluctuations.
Chevron and Exxon pointed to their respective aggressive plans for increasing low cost shale production in the U.S., but the past few quarters complete output of both has atrophied and production from shale is not likely to deliver any marked increase until the upcoming new decade based upon corporate projections.
Both are attempting to show growth and be disciplined said an analyst in the oil industry on Wall Street. But, he added it is a bit of a new transition, especially as they try to increase output in shale.
The two oil giants posted their quarterly numbers the same day as Total SA a French rival posted a jump of 29% in net profit for the third quarter as projects increased and new investments helped lift production.
Exxon, which posted better than had been expected numbers for the quarter, said its Premian production of oil will increase 45% during each year through 2020, to over 400,000 barrels daily. The company has a big shale position in the Bakken shale formation in North Dakota.
However, Exxon said that higher prices helped to contribute over $860 million to earnings while increases in volume added just $20 million to the most recent quarter’s profit from exploration. Exxon’s overall output during the quarter ended at its lowest for the year.
On Friday, Exxon, which is part of a global consortium that includes Portugal’s Petrogal, and Norway’s Statoil won a block in the coveted pre-salt oil region in Brazil at an auction.
At Chevron, a drop in production in the U.S. plus the write down of its operations in Bangladesh weighed on its results, which came up short of estimates on Wall Street.
Chevron shares were down 4.5% a drop that was surprising to CEO John Watson.
The company, based in San Ramon, California, which is one of the largest acreage holders in Permian dating back to the 1930s, recently has started to aggressively develop oil reserves it has there. Permian, said Watson, is a very important part of the portfolio of the company.