ExxonMobil profits slide as oil prices return to ‘normal’

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ExxonMobil’s profits tumbled as the company said oil prices were returning to “normal”, signalling an end to the commodity turmoil that has roiled the global economy since the start of the war in Ukraine.

The US’s biggest oil company posted net income of $7.9bn for the second quarter, less than half of the unprecedented haul of $17.9bn it reported during the same period in 2022.

Excluding last year, the profit figure, which came in broadly in line with Wall Street estimates, was the company’s strongest for this time of year in more than a decade.

“We expected prices to moderate after record earnings,” Kathy Mikells, Exxon’s chief financial officer, told the Financial Times. “If you look at the overall price environment, across most of our businesses, we’re back within what we would call the 10-year normal range.”

The fall in Exxon’s earnings mirrors drops reported by rival oil majors as commodity prices recede after surging in the wake of Moscow’s full-scale invasion of Ukraine last February.

Smaller US rival Chevron reported earnings of $6bn for the period, down by about half compared with a year ago.

Italy’s Eni reported adjusted net profits of €1.94bn on Friday, down 49 per cent from the second quarter of 2022 but still ahead of average analysts’ estimates of €1.6bn.

Shell and TotalEnergies reported similar falls this week with second-quarter earnings down 56 per cent and 49 per cent, respectively. Analysts expect BP to follow a similar course when it reports next week.

Brent crude, the international oil marker, averaged about $78 a barrel during the period, compared with $112 a barrel a year ago. Natural gas prices, which surged to more than $6 per million British thermal units in the US last year, have since fallen back below $3 per million Btu.

Exxon reported revenues of $83bn for the period, compared with $116bn a year ago.

Chevron, which also reported its full results on Friday after previewing its profit figures last week, saw revenues fall from $69bn to $49bn.

Shares in both companies fell by about 1 per cent in pre-market trading.

The two supermajors experienced hefty drop-offs in upstream earnings as prices moderated.

Exxon’s profits of $4.6bn for the segment were down 60 per cent year on year and 29 per cent sequentially.

Chevron’s $4.9bn upstream earnings were off 51 per cent and 42 per cent respectively. Downstream earnings also fell at both groups as refining margins tightened.

Exxon said efforts to drive down costs had meant it was able to maintain elevated profits even in a weaker price environment. The company said it was on track to reduce overheads by $9bn by the end of the year compared with 2019.

“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,” said Darren Woods, Exxon chief executive.

Both Exxon and Chevron reported record production in the sprawling Permian Basin of Texas and New Mexico as they double down on extracting hydrocarbons from the US’s most prolific oilfield.

Chevron said on Sunday that its board had waived a mandatory retirement age for its chief executive Mike Wirth, allowing him to remain in position for the foreseeable future.

“This is all about strategic continuity,” he told the Financial Times. “The board strongly endorses the team and the strategy and it’s so it’s a strong vote of confidence in the trajectory that we’re on.”