Energy giants Chevron and ExxonMobil reported Friday second-quarter sales falling around 30% with profits halved compared to a year ago on lower oil and natural gas prices in 2023. XOM and CVX were down Friday.
Chevron earnings dropped nearly 50% to $3.08 per share. Revenue totaled $48.89 billion, down 29% vs. Q2 2022. Meanwhile, ExxonMobil profits fell 53% to $1.94 per share, sales decreased 28% to $82.91 billion.
The dip in profits and sales follow a year in which XOM, CVX and other energy stocks lead the market, with the companies racking up record profits for 2022, on the back of soaring oil, gasoline and natural gas prices.
CVX edged down around 0.5% to 158.84 during Friday's market trade. On Thursday, Chevron stock fell 1% to 159.69. The Dow Jones component is down around 12% in 2023. Meanwhile, ExxonMobil lost 1.2% to 104.11 Friday. On Thursday, XOM gained 0.3% to 105.42.
Shell gained 0.3% Friday after shedding 2.9% to 60.80 on mixed Q2 financials Thursday. BP edged up 0.1% Friday. On Thursday, BP gave up more than 1% to 36.67 with earnings due Tuesday.
Chevron: Oil Futures Rallying
While oil and natural gas prices have retreated so far in 2023, U.S. oil futures appear to have reached an inflection point. On Friday, U.S. oil prices have hovered around $80 per barrel for the past two sessions, after topping that price level on Thursday for the first time since mid-April.
West Texas Intermediate (WTI) oil futures have rallied around 10% in July as the market focuses on tighter global supply, decreasing views for a U.S. recession and stronger demand in China. Chinese authorities recently pledged to step up stimulus support, bolstering the oil demand outlook for the world's top crude importer.
"The combination of weaker supply growth, cyclical tailwinds and seasonal demand were expected to reverse the bearish trend that has been in place since last fall," Third Bridge analyst Peter McNally wrote Tuesday on crude prices.
"The biggest wild card for prices is still China where demand has underwhelmed forecasts," he added.
Meanwhile, U.S. natural gas futures traded around $2.61 per million British thermal units Friday. This follows a 7% gain last week driven by expectations of heightened demand for air conditioning amid hotter-than-usual weather forecasts until at least August 9.
Chevron Earnings Details
Chevron announced Sunday it would waive the mandatory retirement age of 65 for Chief Executive Officer Mike Wirth, 62, and that Chief Financial Officer Pierre Breber will retire next year.
Eimear Bonner, currently the vice president and chief technology officer at Chevron, will succeed Breber on March 1, 2024, the company said.
The energy giant added in its second-quarter performance highlights that production in the west Texas Permian Basin set a quarterly record. Chevron reported production totaled 772,000 barrels of oil equivalent per day and that Permian production is on track to meet full-year guidance.
Despite that performance, Chevron's net oil equivalent production so far in 2023 is running flat vs. 2022, totaling 2.9 million barrels of oil equivalent per day.
Meanwhile, Chevron returned $7.2 billion to shareholders in Q2, with $2.8 billion in dividends and $4.4 billion in stock purchases.
In addition, the company expects its $6.3 billion deal to acquire PDC Energy to close in August.
In Q1, Chevron topped Wall Street estimates, even as revenue slipped compared to a year ago. Earnings gained 6% to $3.55 per share in the first quarter. Sales dropped 6% to $50.79 billion. Higher margins on refined product sales drove the earning beat, the company said, partially offset by lower oil prices and rising production costs.
Warren Buffett and Berkshire Hathaway sold around $6 billion worth of Chevron stock in the first quarter, according to Berkshire's Q1 financial report. Buffett's outfit reported reducing CVX holdings to $21.6 billion as of March 31.
Warren Buffett began buying the Dow Jones stock in 2020. Prior to Buffett's decision to sell, Berkshire Hathaway amassed a stake totaling 167 million CVX shares, worth around $29 billion.
ExxonMobil Earnings
Estimates: Analysts expected Exxon earnings slipping 50% to $2.03 per share with revenue decreasing 30% to $81.8 billion.
Results: ExxonMobil reported profits falling 53% to $1.94 per share while sales decreased 28% to $82.91 billion.
Exxon's profits from its upstream operations plummeted 60% while its energy products sank 56% compared to last year. The energy giant reported the profits dip was primarily the result of lower natural gas prices and tightening refining margins.
XOM said capital and exploration expenditures totaled $12.5 billion for the first half of 2023, in line with the company's full-year guidance of $23 billion-$25 billion.
Meanwhile, Chief Executive Officer Darren Woods sounded an optimistic note in the earnings release.
"The work we've been doing to improve our underlying profitability is reflected in our second-quarter results, which doubled from what we earned in a comparable industry commodity price environment just five years ago," Woods said.
ExxonMobil also reported in its Q2 earnings it has entered into a long-term agreement with steelmaker Nucor to capture, transport and store up to 800,000 metric tons of carbon dioxide per year from Nucor's steel manufacturing site in Convent, Louisiana. The project is expected to start up in 2026 and is subject to government permitting.
The company also highlighted its recent announcement to purchase Denbury for nearly $5 billion, in a deal the U.S. energy giant touts as integral to carbon emission cutting efforts.
ExxonMobil said the deal provides the energy giant with the largest U.S. pipeline network, 1,300 miles, dedicated to transporting carbon dioxide. XOM also highlighted Denbury's 10 onshore carbon sequestration sites as central to the deal.
XOM Stock
ExxonMobil stock is consolidating, down around 12% rom a late April high, according to MarketSmith analysis.
Morgan Stanley retains a "preference" for ExxonMobil over Chevron stock, analyst Devin McDermott wrote on Tuesday.
CVX offers strong cash flow and low-risk investments, the note said. But XOM provides more "diversification in its growth opportunities, including a lower reliance on shale and upside from cost cutting initiatives."
In Q1, ExxonMobil earnings jumped 36% to $2.83 per share with revenue slipping 4% to $86.56 billion.
ExxonMobil stock has a 48 Composite Rating of 99. XOM shares have a 31 Relative Strength Rating and a 77 EPS Rating.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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