ExxonMobil Corp.'s third quarter earnings fell 18% from a year ago, but for the first time since 2011, production was higher.
The Irving, TX-based supermajor, which has continued to pour billions into buying reserves and into development, has not been as successful as many of the U.S. independents in increasing oil and natural gas production in the last few years.
Retreating from natural gas production and ramping up oil and liquids targets proved successful in the latest period. On an oil-equivalent basis, global production rose 1.5% from 3Q2012. Excluding entitlement volumes and other effects, including sales, production rose 2.7%. Liquids output totaled 2.2 million b/d, up 83,000 b/d from a year ago and more than 5% higher excluding the one-time items.
U.S. natural gas production in the latest quarter fell to 3,557 MMcf/d from 3,712 MMcf/d. Canada/South American gas output rose to 370 MMcf/d from 340 MMcf/d. However, U.S. oil and liquids production climbed to 423,000 b/d, up from 397,000 b/d in 3Q2012. Canada/South America oil and liquids output rose to 273,000 b/d from 247,000 b/d.
The operator is the biggest North American gas producer, but it has been squeezed like other gas operators by low gas prices. Turning the ship toward more profitable oil and liquids targets has taken time. The third quarter's results appear to indicate that liquids-rich production is coming around in the United States, particularly in three areas: the Permian Basin and the Woodford and Bakken shales, investor relations chief David Rosenthal said during a conference call to discuss the quarterly results.
ExxonMobil produced slightly more than 4 million boe/d in the quarter, about 1.5% more than in the year-ago period. North American liquids opportunities were a big contributor, Rosenthal said.
The operator is the largest natural gas producer in North America, but of late it has taken a turn toward more profitable oil and liquids targets. That turn began to show results in the latest period. ExxonMobil, which now is running 41 rigs in the onshore, has none drilling for natural gas, Rosenthal told analysts during a conference call Thursday.
"In the Permian Basin, we are ramping up activities to develop both conventional and unconventional reservoirs across our leading position of 1.5 million net acres. We currently have eight operated rigs and have turned almost 100 wells to sales this year across the entire basin. Current net production is more than 90,000 b/d. More than 65 workover rigs are also active on our Permian properties," and ExxonMobil is expanding infrastructure to enhance oil recovery.
Gross operated production in the Bakken recently topped a record 65,000 boe/d, with output 81% higher from 3Q2012, reflecting the benefits of well pad development and optimized completions, Rosenthal told analysts.
Net profits in the quarter fell to $7.9 billion ($1.79/share) from $9.6 billion ($2.09) in 3Q2012, weighed down by the refining and marketing unit, whose earnings were 77% lower year/year on the higher cost of oil and because of increased competition. Earnings from U.S. upstream operations were $3 billion, up $684 million year/year, while outside the United States, earnings totaled $17 billion, down $2.8 billion.