ExxonMobil and Chevron posted record profits in the second quarter as rising energy prices that followed Russia’s invasion of Ukraine dealt a windfall to US oil majors.
The huge gains come as consumers reel from skyrocketing fuel costs that have helped drive inflation to levels not seen in decades in the United States and Europe, threatening a political backlash against energy companies.
Exxon’s second-quarter net profit was $17.9 billion, beating analysts’ estimates of $16.9 billion, according to data compiled by S&P Capital IQ. The company’s previous record quarterly profit was $15.9 billion in 2012, another year of high oil prices.
Chevron’s second-quarter profit was $11.6 billion, also its highest quarterly profit and easily beating consensus estimates of $9.9 billion.
“Earnings and cash flow benefited from increased production, higher completions and tight cost control,” said Exxon CEO Darren Woods.
The big gains came after UK-based Shell reported its second consecutive record quarter on Thursday with adjusted earnings of $11.5 billion. On the same day, France’s TotalEnergies said profit for the quarter rose to $9.8 billion, nearly triple from a year ago.
The Big Five Western oil companies (Exxon, Chevron, Shell, BP and TotalEnergies) are together on track to generate profits of more than $50 billion in the three months to the end of June.
Italian rival Eni also announced excellent quarterly results on Friday, boosting returns for investors after a four-fold year-on-year rise in adjusted net profit to 3.81 billion euros.
“Downstream” oil refiners Exxon and Chevron drove their results higher after profit margins on selling refined fuels above the cost of buying crude oil exploded to record highs.
In the United States, the national average price of gasoline hit a record high of more than $5 a gallon in June, though it has since declined.
The cash bonanza for Big Oil has sparked attacks from politicians and widened calls for a windfall tax on profits, which companies face in the UK and elsewhere. US President Joe Biden said last month that Exxon was making “more money than God” and vowed to “make sure everyone knows about Exxon’s profits.”
Exxon and Chevron have responded by arguing that they are ramping up spending on new supply to help meet growing demand. However, their capital spending remains well below pre-pandemic levels and they have prioritized increasing dividends and share buybacks.
Woods touted the company’s production growth at the U.S. Permian shale oil and gas fields in Texas and New Mexico, which Exxon says is up 130,000 barrels of oil equivalent per day compared to the first half of 2021 .
Pierre Breber, Chevron’s chief financial officer, said he expects the company to increase spending next year as the company responds to increased demand.
“Our budget this year is about $15 billion and our guidance through 2026 is $15 billion to $17 billion a year, so that gives us $2 billion of room to grow. . . . you should see more capital from us in 2023,” he said, pointing to the Permian as an area that likely would have increased production.
Exxon’s quarterly revenue rose 71% year over year to $115.7 billion, while Chevron’s rose more than 80% to $68.8 billion. Exxon shares rose 3.5 percent to $95.89 early Friday, while Chevron gained 7.1 percent to $161.04.
The outlook for oil majors has darkened in recent weeks as central banks around the world quickly raise interest rates to fight inflation, largely due to the effects of rising of energy prices, raising fears of a global economic slowdown.
Widening economic fears have led to a big sell-off in oil and gas stocks, even with expectations of optimal profits, even as their prices remain up for the year and have surpassed the market