ExxonMobil and Chevron reverse losses amid higher oil prices
U.S. oil majors ExxonMobil and Chevron both returned to profit in the second quarter of the year driven by higher oil and gas prices.
ExxonMobil on Friday announced estimated second-quarter 2021 earnings of $4.7 billion compared with a loss of $1.1 billion in the second quarter of 2020, driven by oil and natural gas demand and best-ever quarterly chemical and lubricants contributions.
The oil major also more than doubled its revenues from $32.6 billion in 2Q 2020 to $67.7 billion in 2Q 2021.
The company’s second-quarter capital and exploration expenditures were $3.8 billion, bringing the first half of 2021 to $6.9 billion, which is consistent with planned lower activity in the first half of the year.
The company anticipates higher second-half planned spending on key projects, including Guyana, Brazil, Permian, and in Chemical sector, with full-year spending towards the lower end of the guidance range of $16 billion to $19 billion.
Oil-equivalent production in the second quarter was 3.6 million barrels per day, down 2 per cent from the second quarter of 2020, driven by increased maintenance activity.
Average realizations for crude oil increased 13 per cent from the first quarter while the natural gas realizations increased 1 per cent from the prior quarter.
“Positive momentum continued during the second quarter across all of our businesses as the global economic recovery increased demand for our products”, said Darren Woods, chairman and chief executive officer.
In addition to reducing structural costs by $3 billion in 2020, the company captured over $1 billion in further structural savings in the first half of 2021. ExxonMobil noted it remains on pace to achieve through 2023 total structural cost reductions of $6 billion relative to 2019.
Chevron earns $3.1 billion
Chevron has also seen a significant improvement in its quarterly performance as the company on Friday reported earnings of $3.1 billion for 2Q 2021, compared with a loss of $8.3 billion in 2Q 2020.
Sales and other operating revenues in the second quarter of 2021 were $36 billion, compared to $16 billion in the year-ago period.
“Second-quarter earnings were strong, reflecting improved market conditions, combined with transformation benefits and merger synergies”, said Mike Wirth, Chevron’s chairman and chief executive officer.
“Our free cash flow was the highest in two years due to solid operational and financial performance and lower capital spending,” Wirth added. “We will resume share repurchases in the third quarter at an expected rate of $2-3 billion per year”.
Chevron continued to exercise capital discipline with year-to-date capital spending down 32 per cent from a year ago. The company recently sanctioned the Jansz-lo Compression project in Australia, which is expected to maintain an important source of clean-burning natural gas.
The company’s worldwide net oil-equivalent production was 3.13 million barrels per day in the second quarter of 2021, an increase of 5 per cent from a year ago.
U.S. upstream operations earned $1.4 billion in 2Q 2021, compared with a loss of $2.1 billion a year earlier. The improvement was primarily due to higher crude oil realizations and the absence of second-quarter 2020 charges for special items including impairments, write-offs and severance accruals. Higher crude oil production also contributed to the improvement between periods.
The company’s average sales price per barrel of crude oil and natural gas liquids was $54 in the second quarter of 2021, up from $19 a year earlier. The average sales price of natural gas was $2.16 per thousand cubic feet in the second quarter of 2021, up from $0.81 in last year’s second quarter.
Capital and exploratory expenditures in the first six months of 2021 were $5.3 billion, compared with $7.7 billion in 2020.