Rising crude oil prices and demand for chemicals used in plastics more than offset the losses from refining, as they reported their main first-quarter results for the U.S. on Friday.
Exxon Mobil Corp. and Chevron Corp. they generated the freest cash flow in more than a year as economies around the world came out of closure and increased energy demand.
Crude oil prices and demand for chemicals used in plastics more than offset losses from oil refining, as the first quarter results of U.S. explorers were revealed on Friday.
Despite living up to Wall Street’s earnings expectations, Chevron shares fell 2.4% after disappointing investors who anticipated a revival of share buybacks. Although Exxon’s deep refining losses were reduced by chemical profits, inventories declined 1.7%.
All super-majors are making money again after recovering 30% of crude to more than $ 65 a barrel, driven by rising energy demand as economies emerge from the pandemic and OPEC maintains the line of large increases in supply. BP Plc, Royal Dutch Shell Plc and Total SE preceded their US counterparts with greater profits than expected.
Exxon’s free cash flow of approximately $ 6 billion was more than enough to cover its huge dividend, the first time the oil giant has been able to do so since the end of 2018. Chevron recorded $ 3.4 billion in first-quarter cash flows, enough to fund its recent dividend increase, which is a closely monitored metric for large oil companies.
For both companies, a key factor in the increases in cash flow was the sharp reduction in spending, as less risky efforts, such as the drilling of slates, were favored in the face of more expensive megaprojects. Exxon cut capital spending by more than half, while Chevron’s fell 43 percent from a year ago. It also has no plans to increase spending in light of higher oil prices, a signal the discipline maintains for now.
Exxon gained 64 cents a share in the first quarter, surpassing analysts ’average estimate of 61 cents in a Bloomberg poll. The oil giant’s exploration and drilling division boosted most of the gains, but it also received a substantial tailwind from rising chemical prices that helped offset losses suffered during the deadly storm of February in Texas.
Exxon’s shift from last year’s unprecedented loss chain will help restore investor faith in their ability to maintain and even grow S&P’s third-largest dividend, the cornerstone of the launch. of CEO Darren Woods on Wall Street. Unlike European rivals Shell and BP, Exxon did not cut payments last year, but the decision was costly: loans rose 44%, to nearly $ 68 billion. Exxon cut debt by about $ 4 billion this quarter.
Chevron earned a 90-cent adjusted earnings per share, according to a statement, which matches the average of analysts’ forecasts. Sector-wide results indicate that the worst could have gone through the double threat of global brutality and Covid-19 closures killing demand.
Amid the brighter prospects, significant challenges remain. Chevron’s U.S. refining network lost money for the third time in four quarters, while its overseas fuel manufacturing plants reduced crude processing by 16% to meet anemic fuel demand. transport.
The two companies cited the negative impacts of the deadly winter storm that hit Texas in mid-February.
Chevron wants to start buying shares, but declined to provide a deadline, reiterating the position announced in March.
“While we wait, we look forward to starting stock repurchases when we are confident that we can maintain a repurchase program for several years through the oil price cycle,” Chief Financial Officer Pierre Breber said in comments prepared by to a conference call with analysts later this morning.