Exxon Mobil Posts Lower Third-Quarter Profit Despite Hike in Crude Oil Prices

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Exxon Mobil has reported a third-quarter profit of $9.1 billion, marking a significant decrease of 54 percent from the same period a year ago.

While Exxon’s earnings have benefited from increased crude oil prices compared to the previous quarter and growing demand for gasoline and diesel, it’s essential to note that these prices are considerably lower than the record highs seen a year ago.

Exxon’s oil and gas business was negatively impacted by a 60 percent reduction in natural gas prices compared to a year ago, alongside a 14 percent drop in crude oil prices, as reported by the company.

“We delivered another quarter of strong operational performance, earnings and cash flows, adding nearly 80,000 net oil-equivalent barrels per day to support global supply,” said Darren Woods, Chairman and CEO of Exxon, said in its earnings report.

Challenges in Refining and Chemicals:

Profits from refined products and chemicals also took a hit, experiencing a drop of over half compared to the previous year. Factors contributing to this decline include lower margins for gasoline and diesel and unfavorable foreign exchange rates.

Chemical earnings in the third quarter amounted to $249 million, significantly down from $828 million in the second quarter, mainly due to higher raw material costs.

Exxon’s oil and gas production saw a slight decrease of about 1 percent compared to the same quarter the previous year. The company aims to end the year with an average production of 3.7 million barrels of oil and gas per day.

Growth Through Acquisitions:

Exxon recently entered into two significant acquisitions that are expected to boost future output. The company agreed to purchase shale rival Pioneer Natural Resources for $59.5 billion and carbon pipeline operator Denbury for $4.9 billion. Exxon’s CEO Darren Woods stated that the strategy revolves around ensuring the best and most resilient portfolio for the company.

Despite these acquisitions, Exxon’s balance sheet remains strong, with cash reserves increasing by 10 percent over the second quarter to $33 billion. Exxon’s Chief Financial Officer Kathryn Mikells emphasized the importance of the robust cash balance, which provides the flexibility needed to navigate potential challenges in the commodity market.

Exxon reported that it has achieved a targeted $9 billion reduction in costs compared to 2019 levels, and it is committed to ongoing cost-cutting measures.

The company anticipates that its full-year capital expenditures will be at the upper end of its guidance range, ranging from $23 billion to $25 billion. Exxon’s Capex touched $5.196 billion in Q3 2023 and $16.618 billion in the first nine months of 2023. Its Capex was $5.06 billion in Q2 2022 and $13.3 billion in the nine of months of 2022.

Exxon has been actively selling assets worldwide as part of its focus on more lucrative projects in U.S. shale and in Guyana, with the recent announcement that its Italy refinery is up for sale. In the third quarter, Exxon concluded the sale of a refinery in Thailand, with proceeds amounting to $900 million, bringing the total asset sales for the year to $3.1 billion.

Mikells indicated that there is no anticipation of an acceleration of asset sales following the Pioneer acquisition, which is set to significantly increase Exxon’s Permian production to 1.3 million barrels of oil and gas per day.

Higher production from Guyana and the Permian is expected to partially offset lower crude and natural gas realizations and divestments compared to the previous year, Exxon said.

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