Exxon Mobil and Chevron beat third-quarter earnings estimates Friday, with Exxon once again reporting record profits on the back of increased oil and gas prices. Both Exxon Mobil stock and Chevron shares swung higher Friday.
Exxon Mobil Stock: Earnings
Estimates: Wall Street forecast earnings per share surging 140% to $3.80 per share. Analysts predicted sales vaulting 42% to $104.6 billion. Wall Street also expected capital expenditures coming in at $5 billion in Q3, an increase of 72% year over year, according to FactSet.
Results: Exxon reported earnings soaring 181% to $4.45 per share in Q3 while revenue jumped 52% to $112.1 billion. Capital and exploration expenditures came in at $5.7 billion in the third quarter. So far in 2022 XOM has spent $15.2 billion, which the company says is on track with full-year guidance of $21 billion-$24 billion.
Oil-equivalent production in the third quarter was 3.7 million barrels per day, up more than 50,000 oil-equivalent barrels per day from Q2.
Exxon Mobil also announced a fourth-quarter dividend of 91 cents per share, an increase of 3 cents per share. The company said it plans to pay out $15 billion in aggregate for the year.
Exxon Mobil stock advanced 2.7% to 110.47 Friday during market trading. XOM shares are trading in a buy zone above a 105.67 buy point, according to MarketSmith. Trading volume on the breakout has remained well below 40% of its 50-day average, the threshold to confirm a breakout.
XOM stock has been outperforming the S&P 500 since it made a strong move on Oct. 13.
In early October, Irving, Texas-based Exxon signaled natural gas prices would support strong third-quarter demand expectations. In Q2, both Exxon and Chevron had record profits. Exxon Mobil earnings soared 276% to $4.14 per share. Sales spiked 70% to $115.7 billion. Exxon Mobil's capital investments totaled $9.5 billion for first half of 2022.
Ahead of earnings, Jefferies analyst Lloyd Byrne on Oct. 18 said Exxon has cut capital expenditures from its recent highs of $31 billion in 2019. He expects spending will be about $17 billion in 2022, well below the company's estimates.
"We continue to be positive on Exxon across its divisions, as we see strong but targeted upstream growth in high-value and low-cost projects," Byrne wrote. He added that he sees "higher exposure to downstream elements enabling the company to capitalize on higher mid-cycle refining margins, and an energy transition strategy that plays to its strengths."
Exxon Mobil stock has a perfect Composite Rating of 99. It has a 97 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share-price movement. The EPS Rating is 80.
Chevron Earnings
Estimates: Analysts expected earnings to grow 63% to $4.82 per share. Wall Street forecast revenue jumping 28% to $57.4 billion. Chevron's capital expenditure was predicted to be a little more than $3 billion in Q3, slowing to 7% growth year over year, according to FactSet.
Results: Chevron reported EPS surging 88% to $5.56 per share. Sales increased 59% to $66.6 billion in the third quarter. Capital spending came in around views at $3 billion in Q3. Chevron's capital spending so far in 2022 totals $8.2 billion, up from $5.8 billion in the first nine months of 2021.
Chevron shares advanced 1% Friday to 179.91. The stock edged up 0.3% to 177.59 Thursday, following a 1.3% gain on Wednesday. CVX stock has been climbing toward a 182.50 buy point, according to MarketSmith. The stock advanced above its 50-day moving average on Oct. 11. It has now shot up 13% in the last two weeks, and has a 52% gain for the year.
Third Bridge analyst Peter McNally wrote Friday that oil volumes overseas, natural gas volumes, commodity prices and cost control combined to drive Chevron's earnings.
"The bottom line is that Chevron is delivering on its plan, capturing the upside of the recent commodity price surge, and maintaining capital discipline," McNally wrote.
In Q2, Chevron earnings per share leapt 240% to $5.82. Revenue spiked 83% to $68.7 billion in the second quarter. CVX's capital spending in the first half of the year increased 26% to $6.7 billion.
Chevron CFO Pierre Breber told investors in late July he expected CVX to end 2022 below its $15 billion spending budget.
Chevron shares rank 10th in IBD's Oil&Gas-Integrated industry group. The stock has a 98 Composite Rating and a Relative Strength Rating of 96. Additionally, it has an 80 EPS Rating.
Exxon Mobil Stock: Energy Markets
The financial reports from Exxon and Chevron come amid fears of a recession and possible oil and gas demand destruction in the forecasts.
In early October, the Organization of the Petroleum Exporting Countries and its key allies including Russia, known as OPEC+, decided to cut their oil production by 2 million barrels per day in November. The group had been warning of a possible production cut, due to forecasts calling for economic slowing and a lower outlook for energy demand.
Meanwhile, Biden has been releasing millions of barrels of oil from the U.S. Strategic Petroleum Reserve, attempting to hold down U.S. oil and fuel costs ahead of the looming midterms elections.
"My message to oil companies is: You're sitting on record profits, and we're giving you more certainty. So you can act now to increase oil production now," Biden said during an Oct. 19 speech.
U.S. crude futures fell 1% to around $88 a barrel Friday as U.S. exports hit record levels and refineries ran at particularly strong levels. Meanwhile, U.S. natural gas prices dropped 1.4% to $6 per million British thermal units. Last week, futures dropped below $5 per million Btu to the lowest prices in seven months.
Oil Companies Prioritize Buybacks Over Production Gains
On Friday, the average price of gasoline at the pump was $3.76, according to AAA — around 12% above year-ago levels.
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