Lower oil and gas prices hit Exxon and Chevron hard
Exxon’s profit almost halves to $3.2bn
US energy firms ExxonMobil and Chevron are feeling the force of lower oil and gas prices.
Chevron reported a fall in net profit of over a third, dropping to $2.6bn (£2bn, €2.33bn) or $1.36 per share for the third quarter of 2019.
ExxonMobil suffered even worse with Q3 net profits of $3.2bn, or $0.75 per share, a reduction of almost half of the $6.2bn it saw last year.
Although noticeable, these results have not surprised investors and follow the reduced earnings reports of British Petroleum and Royal Dutch Shell released earlier this week. In fact, according to S&P Capital IQ, Exxon beat the Wall Street prediction of $0.66 per share.
Exxon was able to beat analyst predictions by expanding its oil and shale production. Oil output rose by 3 per cent to 3.89m barrels per day, the fourth quarter in a row of year-on-year gains. Meanwhile its production in the Permian Basin, the US’s main shale field, expanded by 7 per cent to around 293,000 barrels of equivalent oil per day.
Other parts of the major conglomerate also faltered. Exxon’s chemicals business, for example, was down 66 per cent year-on-year due to higher project expenses and a global overcapacity in plastics.
The price of oil has risen steadily from the lows of 2016 but nowhere near the level seen before the oil plunge of 2014. With OPEC and its allies announcing further expansion of oil output this gain does not look set to continue in the long term.
However, oil futures unexpectedly surged, with WTI Brent Crude Oil up 1.75 per cent in mid-afternoon trading on November 1 at $55.13 a barrel and Brent Crude Oil Futures at $60.62, up 1.68 per cent.