US oil and gas giant ExxonMobil reported a 56% fall in second-quarter net profit to $7.9 billion on Friday, due to lower gas prices and a contraction in refining margins.
Lower sales: ExxonMobil faces challenges
Sales also fell, to $82.91 billion between April and June, compared with $115.68 billion over the same period in 2022. On a per-share basis, and excluding exceptional items, net earnings came to $1.94, compared with $4.21 a year earlier. This is below analysts’ expectations for this line of accounts ($2.01 discounted), but sales are better than expected.
“The work we’ve done to improve our underlying profitability is reflected in our second-quarter results, which doubled what we earned in a comparable commodity price environment five years ago,” commented Group boss Darren Woods, quoted in a statement.
The giant, like its competitors, achieved record profits in 2022 thanks to the surge in hydrocarbon prices linked to the recovery in demand and a reduction in supplies from Russia as a result of the war in Ukraine.
A week ago, US oil prices reached their highest closing level for three months, on the back of commitments by Saudi Arabia and Russia to reduce their volumes. But, ExxonMobil pointed out, a downturn in natural gas prices (-40% according to it) and lower margins in the refining business “negatively affected results” in the second quarter, to the tune of almost $4 billion.
Production up, savings targets in sight: ExxonMobil continues to grow
Higher-than-expected seasonal maintenance operations also weighed on business. The giant also reported that production in the Permian Basin, straddling Texas and New Mexico, and in Guyana was up 20% year-on-year.
Total production reached 3.7 million barrels of oil equivalent per day (boe/d). With the sale of assets and the exit from its Sakhalin-1 oil field in Russia, net production increased by just 160,000 boepd.
ExxonMobil said it remained on track to meet its savings target of $9 billion by the end of 2023, compared with 2019. It has already achieved 8.3 billion. Its shares were virtually stable (-0.22% at $105.19) in pre-market trading on the New York Stock Exchange.
