Exxon Beats Estimates on Higher Permian Basin Oil Production

(Bloomberg) -- Exxon Mobil Corp. beat analysts’ estimates as higher oil production from the US Permian Basin helped cushion a drop in crude prices and tightening refining margins. 

Exxon earned $1.92 a share in the third quarter, more than the $1.87 median estimate among analysts surveyed by Bloomberg. Chevron Corp. and Shell Plc also turned in better-than-expected performances. 

Exxon is the best-performing oil major this year, rising more than 15% even as international crude prices declined. North America’s largest energy explorer demonstrated it has more oil and natural gas production growth — and at lower cost — than rivals. 

Chief Executive Officer Darren Woods has stood firm on his commitment to fossil fuels, aiming to drive costs so low that Exxon would remain profitable even if the energy transition causes fossil-fuel demand to decline in coming decades. 

Fast-growing oil developments in Guyana and the Permian Basin are producing crude for less than $35 a barrel at a time when a barrel fetches more than $70, and Exxon is working on several gas-export projects in Texas, Papua New Guinea and Mozambique. It’s now the biggest producer in the Permian region after its $60 billion acquisition of Pioneer Natural Resources Co. earlier this year. 

Exxon increased dividends for the 42nd consecutive year to 99 cents a share, higher than the 97-cent Bloomberg Dividend Projection.

Exxon was able to “fully fund” dividend payouts and share repurchases with cash flow without resorting to debt, Chief Financial Officer Kathy Mikells said during an interview.

The company also has a $27 billion cash pile and a net-debt-to-capital ratio of just 5%, leaving it in a “strong position” ahead of any oil-market downturn, she said.

“We have done a lot of work to fundamentally improve the underlying earnings power of the business and that’s going to put us in really good stead,” Mikells said.

Investors are taking note. The stock touched a record high in recent weeks, having quadrupled from pandemic-era lows. Its peers have struggled to catch up. European rivals BP Plc and Shell are looking to revive fossil-fuel growth after ill-fated bets on low-carbon energies while Chevron’s $53 billion deal to buy Hess Corp. and enter Guyana has stalled in arbitration — after being challenged by Exxon.

But the Texas oil giant’s strong stock performance this year leaves little room for disappointment. 

The company faces significant headwinds in refining, where it has a much larger footprint than competitors, as fuel-making margins decline due to lackluster demand and new supply from the Middle East. Oil output from Guyana suffered a setback in the third quarter as Exxon paused production at two of three production vessels to connect a gas-to-shore pipeline. Growth is expected to resume in the fourth quarter. 

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