America’s largest oil and natural gas producer, ExxonMobil Corp., delivered an underwhelming performance in the second quarter, missing Wall Street expectations, but U.S. upstream profits turned around from a year-ago loss.
Net earnings totaled $4 billion (92 cents/share) in 2Q2018 versus $3.4 billion (78 cents) a year ago. Revenue climbed to $73.5 billion from $58.1 billion.
CEO Darren Woods was sanguine about the results, which he said “were primarily impacted by significant scheduled maintenance undertaken to support operational integrity.” The supermajor dealt with an earthquake in Papua New Guinea (PNG), and continued to recover from first quarter operational incidents in the downstream arm, which were “disappointing. However, good progress was made during the second quarter in fully recovering from these incidents.”
In the U.S. division, upstream earnings totaled $439 million, a sharp reversal from the $183 million loss in 2Q2017. The downstream arm also scored with profits of $695 million from $347 million, while domestic chemical earnings fell to $453 million from $481 million.
Global production plunged 7% from a year ago to 3.6 million boe/d, even though liquids output increased from growth in the Permian Basin, Bakken Shale and the Hebron play offshore Canada.
U.S. tight oil growth in the Permian and Bakken reached more than 250,000 boe/d in 2Q2018, an increase of 30% year/year. The Hebron field in Canada continued to exceed expectations, ramping up to 25,000 boe/d.
However, global natural gas volumes fell 10% year/year, reflecting “a continuing shift in U.S. unconventional development from dry gas to liquids,” along with downtime in Qatar, Australia, and PNG.
Capital and exploration expenditures were increased by 69% from a year ago to $6.6 billion, reflecting “key investments” in the Permian, Brazil and Indonesia.
Woods put the results in context, noting that key projects in the Permian, Guyana and Brazil, along with natural gas-rich projects in Mozambique and PNG, were setting the company up for “long-term earnings growth plans.
“The high quality of these resources, combined with our strengths in project execution and innovation, will generate strong value over time.”
ExxonMobil made progress to build its chemicals business, with quarterly sales at their highest level since 2007 on new volumes from the United States and Singapore contributing more than 530,000 metric tons.
During the quarter the company also announced greenhouse gas reduction measures to improve emissions performance by 2020, including a 15% decrease in methane emissions and a 25% reduction in flaring compared with 2016. The company also announced its intention to improve its energy efficiency in refining and chemical manufacturing facilities.