(Photo: REUTERS/Jessica Rinaldi/File Photo)
Exxon Mobil reported stronger-than-expected third-quarter earnings Friday, surpassing Wall Street projections and raising its quarterly dividend as the oil giant capitalized on robust production gains, strategic acquisitions, and steady demand. Exxon recorded $8.6 billion in net income, or $1.92 per share, beating the $1.88 per share forecast by analysts surveyed by LSEG. This performance, however, represented a slight decline from last year's $9.07 billion in net income, or $2.25 per share, as falling refining margins and lower natural gas prices softened profits.
CEO Darren Woods highlighted Exxon's production achievements in key regions. "This quarter is one of the best third quarters we've had in the past decade," Woods told CNBC's Squawk Box, attributing much of the success to "record volumes coming from our advantage assets like Guyana and the Permian." Exxon's daily production reached 4.6 million barrels of oil-equivalent, a 5% increase from the prior quarter and the highest level in more than four decades.
Exxon's acquisition strategy has significantly bolstered its production capabilities. Contributions from Pioneer Natural Resources, a recent $60 billion acquisition, factored into the quarter's growth. This acquisition, finalized in October after Federal Trade Commission approval in May, will expand Exxon's presence in shale, with Pioneer adding extensive shale reserves to Exxon's portfolio in the Permian Basin, one of the world's richest oil fields.
Meanwhile, the company announced a 4% increase to its quarterly dividend, now at $0.99 per share, further enhancing shareholder value following a $9.8 billion return to investors in the third quarter. Shares of Exxon were up about 1% in pre-market trading on Friday, contributing to the stock's overall gain of 16.8% this year.
In terms of revenue, Exxon reported $90 billion, falling short of analysts' $93.94 billion estimate but reflecting stability in a period marked by fluctuating oil prices. The company's earnings come amid a broader industry context of declining oil prices. Following Israel's targeted strike on Iran, which spared key oilfields, the outlook on oil prices has remained moderate as a supply-demand balance leans toward an oversupply. This expectation of lower prices contrasts with the oil price surges seen in previous years, creating a more stable pricing environment for Exxon and its industry peers.
Exxon's recent pivot to carbon capture and climate-aligned projects also represents a strategic evolution within its core business model. In July 2023, Exxon announced it would pay $4.9 billion to acquire Denbury Resources, a company specializing in carbon capture and storage (CCS). This acquisition positions Exxon to take advantage of emerging climate policies incentivizing CCS technology, as the U.S. government moves toward implementing more stringent climate legislation.
Despite economic uncertainties, Exxon's Q3 performance was mirrored by strong results from Chevron Corp., which reported adjusted earnings of $2.51 per share, beating Wall Street's expectation of $2.47 per share on revenues of $50.67 billion. Like Exxon, Chevron does not adjust earnings for one-time events. These results underscore the resilience of U.S. oil majors, who have increasingly leaned on production growth and portfolio expansions to drive profitability amid global demand shifts and environmental pressures.
Exxon's upstream production strategy has centered on maximizing output from resource-rich assets, with record volumes reported from Guyana and the Permian. Guyana, a developing oil hotspot, has seen Exxon lead significant exploration and production efforts in recent years. The success of these initiatives has been instrumental to Exxon's robust third-quarter numbers, positioning the company to sustain its growth trajectory.
"Production volumes are reaching new heights," Woods remarked, emphasizing the company's strategic advantage from "low-cost, high-return assets." Exxon's production levels in Guyana, alongside its significant U.S. shale footprint, have reinforced the company's operational scale and cost efficiencies, providing a foundation for continued investment in both traditional and renewable energy avenues.
