San Francisco Frontiers - Lower profits at US oil giants amid fall in crude prices

The results showed the companies remained highly profitable in the first quarter despite about a 20 percent decline in crude prices since Trump's January return to the White House, a drop also spurred by the moves of Saudi Arabia and other crude exporters to boost output.

But the environment marks a change from the surge in profits after Russia's invasion of Ukraine sent oil prices skyrocketing. Both ExxonMobil and Chevron also cited weak refining margins as a negative factor in the first quarter.

ExxonMobil reported profits of $7.7 billion, down 6.2 percent from the year-ago level. Revenues were essentially flat at $83.1 billion.

The 2024 purchase of Pioneer Natural Resources for around $60 billion lifted ExxonMobil's volumes from the Permian Basin, a fast-growing petroleum region in the southwestern United States.

ExxonMobil also saw petroleum production growth in Guyana, which helped to compensate for headwinds in the first quarter, including "significantly weaker" refining margins, the company said in a press release.

ExxonMobil said it is on track to start up 10 "advantaged projects" across its businesses in 2025.

From this group, the company has already started and is ramping production at an "enormous" chemical complex in China that will serve the domestic market and will be "protected from tariff impacts," according to prepared remarks for the company's earnings conference call.

ExxonMobil has also launched an advanced recycling unit in Baytown, Texas.

Chief Executive Darren Woods said ExxonMobil's progress in weeding out inefficient, high-cost projects means the company can "excel in any environment," according to the earnings press release.

During Friday's conference call with analysts, Woods confirmed that ExxonMobil plans to continue to repurchase shares at a fast clip after buying back $4.8 billion last quarter.

Such repurchases reduce the dividend burden after ExxonMobil's all-stock purchase of Pioneer.

"Our stock price is heavily correlated with crude and crude prices... and so it moves down with crude prices," Woods said. "In my mind, that's a great buying opportunity."

- Chevron tempers buybacks -

At Chevron, profits dropped 36 percent to $3.5 billion, while revenues dipped 2.3 percent to $47.6 billion.

The company pointed to recent production increases in Kazakhstan, the Permian Basin and in the Gulf of Mexico.

Chevron plans to temper its share repurchases in the second quarter to between $2.5 billion and $3 billion after spending $3.9 billion in the first quarter.

Chief Executive Mike Wirth said the moderation comes off an extremely robust pace of buybacks in 2023 and 2024.

"The rate at which we're buying shares back now is higher than at any point in our history," Wirth said on a conference call, noting that slowing those purchases makes sense now the crude was moving to the "lower part" of the expected trading range.

The oil giant could make other adjustments if the business conditions worsen, executives said.

"The trade and tariff situation has been dynamic and we need to see how that manifests itself over time," said Wirth, who pointed to the shift in oil exporters as another watch item, while adding "We're very well prepared."

Shares of ExxonMobil dipped 0.1 percent in early-afternoon trading, while Chevron gained 1.3 percent.

W.Carter--SFF