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Reduced Oil And Gas Prices Force Exxon To Report A Drastically Lower $9.1 Billion Profit

Reduced Oil And Gas Prices Force Exxon To Report A Drastically Lower $9.1 Billion Profit
Exxon Mobil Corp. missed analysts' expectations for the second consecutive quarter and reported a substantially lower $9.1 billion third-quarter profit on Friday. The company's earnings was also 54% lower than a year earlier.
Although prices are still far below record levels from a year ago, higher crude oil prices compared to the previous quarter and increased demand for petrol and diesel have helped the largest U.S. oil producer's earnings.
In early trading, shares dropped almost 2% to $105.55, with a $2.25 profit per share, which was 5% less than experts' projected $2.37 profit per share. After Russia invaded Ukraine a year ago, the corporation made $4.68 per share as oil and gas prices rose.
RBC analyst Biraj Borkhataria said that while the results were "broadly in line" with market forecasts, the profit from motor fuels and chemicals was much smaller than a year ago and below recent predictions.
According to Exxon, the company's oil and gas pumping division suffered from a 14% decline in crude oil prices and a 60% decline in natural gas prices from a year ago.
Profits from refined goods and chemicals decreased by more than half compared to the same period last year, with decreased margins for petrol and diesel as well as weaker foreign exchange earnings.
Due to increased raw material costs, Chemical's third-quarter earnings of $249 million were lower than the company's second-quarter earnings of $828 million.
Exxon's production of petrol and oil decreased by almost 1% from the same quarter last year. It wants to produce 3.7 million barrels of oil and gas per day on average by the end of the year.
The business just closed two agreements that will increase output going forward. It consented to purchase carbon pipeline operator Denbury for $4.9 billion and shale rival Pioneer Natural Resources for $59.5 billion.
"The whole strategy is around making sure that we have the best portfolio and the most resilient portfolio," said Exxon Chief Executive Darren Woods on a call to discuss results.
The company's balance sheet has not been harmed by the all-stock acquisitions. Exxon increased their cash holdings by 10% to $33 billion during the second quarter.
"We feel really good about our cash balance," Chief Financial Officer Kathryn Mikells said in an interview. "It puts us in a good position to ultimately ensure we have the flexibility we need when eventually the commodity cycle turns against us."
Exxon declared that it had decreased expenses by the intended $9 billion from 2019 levels and promised to keep doing so.
Executives stated that the company will end its full-year capital expenditures at the upper half of their $23 billion to $25 billion projection.
The corporation recently listed its refinery in Italy for sale. It has been selling assets all over the world as it concentrates on more profitable projects in Guyana and U.S. shale.
Exxon increased the total amount of assets sold this year to $3.1 billion by concluding the sale of a refinery in Thailand in the third quarter and receiving $900 million in cash.
According to Mikells, she did not think that asset sales would pick up speed after Pioneer was acquired.
When the transaction is finalised in the first half of next year, Exxon's Permian production will more than quadruple to 1.3 million barrels of oil and gas per day.
In comparison to the previous year, the company said that decreased realisations and divestments of petroleum and natural gas were somewhat compensated by higher production from Guyana and the Permian.

Christopher J. Mitchell

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