Major oil corporations reported earnings last week, reporting higher production and apparently renewed interest in fossil fuels.
Claudine Hellmuth/POLITICO (illustration); Arne Hückelheim/Wikipedia (pump springs); Free Selection (silver); jannoon028/Freepik (barrels of oil)
The increase in production is paying off for some of the world’s oil and fuel companies.
Exxon Mobil, Shell, BP and ConocoPhillips beat analysts’ expectations for the second quarter last week, while Chevron’s earnings disappointed in part because of its refining business.
Most of the company’s billions of dollars in profits came from oil and fuel production, and executives said they would spend more on new exploration projects in the future. Drew Depoe, senior analyst at Enverus Intelligence Research, said that doesn’t necessarily mean investors are abandoning climate measures at major oil companies, but it does mean they are keeping a closer eye on production revenues.
“I would see this as a sign of how those corporations view the resilience of global oil demand in the medium term,” Depoe said. “Investors need to invest in oil and gas, given the high returns. But in this space, they at least have one eye on viewing profiles.
Chevron also announced that it will move its headquarters from San Ramon, California, to Houston. CEO Mike Wirth said on the company’s earnings call Friday that the resolution was made “to allow for greater collaboration and engagement, both internally and externally. ” He publicly complained about some of California’s oil and fuel stocks, which industry observers say could be part of the reason for the move.
In a social media post on X on Friday, Texas Gov. Greg Abbott (right) welcomed Chevron and said Texas is the company’s “true home. “
Below are some key takeaways from oil companies’ earnings calls:
Exxon and Chevron executives were transparent Friday about their goals for the coming quarters and years: to expand production to keep making profits.
Exxon said oil and fuel production in its upstream business increased 15% in the second quarter from the first quarter. Much of this is the result of record production in the Permian Basin and the South American country of Guyana.
Exxon’s overall oil and liquids production levels reached nearly 3 million barrels per day in the second quarter.
Those gains helped boost Exxon’s second-quarter earnings to $9. 2 billion, up from $7. 9 billion a year earlier. Chief Executive Officer Darren Woods said the Texas-based company would continue to buy more barrels and that demand for fossil fuels remained high.
Exxon’s $60 billion acquisition of Pioneer Natural Resources, finalized earlier this year, also helped boost the company’s second-quarter earnings.
“Oil demand continues to reach record levels,” Woods said on Exxon’s earnings call. “Last year was a record. We expect this year to be a record and next year it will be as well,” Woods said.
“It’s just a matter of managing the supply that’s coming in, largely because of what’s happening in America,” he added.
Although reports differ on when global oil demand may peak, a recent study suggested that the industry may not have enough oil reserves to meet future demand without immediate electrification of vehicles. No.
Also on Friday, Woods said the start-up of the Golden Pass liquefied herbaceous fuel terminal in Texas would be delayed. Zachry Holdings, the main contractor for the task, filed for bankruptcy earlier this year. An Exxon executive told Bloomberg that the company now doesn’t expect the project to start operating until late 2025.
Rob Thummel, senior portfolio manager at Tortoise Capital Advisors, said he expects Exxon’s output to continue to grow over the year and next, highlighting the $28 billion the company plans to spend on equity investments this year. He said he expects the company to continue its record oil and gas production in the coming quarters.
“Global energy demand is setting new records every year, global oil production is at record levels, and global fuel production is at record levels,” Thummel said. “This means that global consumption is at record levels and, in theory, rising unless a global recession breaks out. “
For Chevron, Thummel attributed some of its lower-than-expected earnings to certain tax needs and a handful of other “unusual” monetary items.
But Chevron’s net oil equivalent production in the second quarter also rose 11% from the same period a year earlier. Those numbers would rise if Chevron’s acquisition of Hess goes through, but that $53 billion deal has faced some legal challenges.
The Federal Trade Commission delayed its resolution in July to approve the merger until an arbitration between the two corporations and Exxon is resolved, according to a Bloomberg report.
On Friday, Chevron’s Wirth said it appeared that an arbitration between Exxon and Chevron over Guyana’s offshore assets would not be finalized until next year, delaying the scheduled Hess deal until at least 2025.
“We are committed to the merger and look forward to merging both companies,” Wirth said.
After years of delays, Houston-based ConocoPhillips is ahead of schedule to build the $8 billion Willow oil allocation in the Arctic.
The Houston-based company got the go-ahead from Biden’s leadership last year despite significant opposition from climate groups. Today, the company boosted its planned capital back to the upper level of its previous guidance of $11. 5 billion.
ConocoPhillips said it has achieved significant milestones for Willow, adding the arrival of intermediate operations modules built elsewhere in the United States and shipped to Alaska, as well as the start of production at a central facility ahead of schedule.
“It’s vital to achieve those milestones temporarily and that gives us a lot of confidence,” Kirk Johnson, senior vice president of global operations at ConocoPhillips, said on a call with investors Thursday. “We are still on track to get first oil in 2029. “
Willow is built on federal land in the National Petroleum Reserve in Alaska. The Biden administration, which had pledged to limit the advance of oil and fuel on public lands, said it was forced to approve a reduced edition of the oil allocation because of ConocoPhillips’ long-standing leasing rights.
After a federal ruling over rejected efforts by a coalition of environmental groups to block the structure from moving forward, the company made a final investment decision on the task and began construction at the end of the year. ‘last year. Willow is expected to produce 180,000 barrels of oil during the day at its peak.
ConocoPhillips, which reported a profit of $2. 3 billion in the second quarter, up from $2. 2 billion a year earlier, said it would spend $1. 5 billion to $1. 7 billion on Willow this year after a “successful winter structure season. “
The isolated nature of Alaska’s northern slope and extreme winter conditions led the company to build much of the structure of Willow’s facility outside the Arctic. More paintings are expected on the northern slope next year.
ConocoPhillips CEO Ryan Lance told investors on last week’s earnings call that Willow is being built partly offsite to take advantage of the year-round structure in the Gulf of Mexico region. . Oil activity in the Arctic is limited to the winter months, when the layer of ice and snow protects the tundra from damage. But winter storms can hamper business.
Lance also confides in investors that ConocoPhillips is largely building on its experience in building Willow and that the project’s design reflects what it has built on the North Slope over the past decade.
“That calms you down. We know what we are doing. We have already done it. And those are just repetitions of things we have done in the past,” he stated.
Last week, two of Europe’s largest oil and fuel companies posted second-quarter profits that beat analysts’ expectations, as their businesses continue to move away from renewable energy.
On Thursday, Shell reported a profit of $6. 3 billion in the second quarter, up from $5. 1 billion a year earlier. It will buy back about $3. 5 billion worth of shares in the third quarter, in line with its recent plans.
Meanwhile, BP said it made a profit of $2. 8 billion in the second quarter, up from $2. 6 billion a year earlier.
Environmental teams balked at the gains as the two London-based corporations announced cuts in their energy transition activities and new investments in fossil fuels.
Chiara Liguori, senior policy adviser on climate justice at Oxfam Britain, a confederation of organizations aiming to eliminate global poverty, took aim at Shell in a statement.
“It is shameful that Shell, as one of the world’s largest and most successful fossil fuel companies, continues to make billions in profits from its planet-destroying oil and gas operations,” he said. “At a time when the company is taking competitive actions to reduce emissions, it is instead weakening its climate goals and proceeding to invest in new oil and fuel projects, in favor of short-term returns for shareholders. “
In May, more than 78 percent of Shell shareholders voted in favor of a solution that included corporate carbon dioxide emissions targets that were less stringent than those the company had set last year.
These adjustments were reflected in profits. In the second quarter, Shell’s Renewable Energy and Energy Solutions business segment reported a loss of $187 million. Its upstream oil sector earned $2. 33 billion in the same period.
Shell CEO Wael Sawan said Shell remains committed to achieving 0 carbon emissions in its own operations until 2050 and that the company continues to expand its renewable energy portfolio where returns are attractive.
He pointed to a recent definitive investment resolution to pursue a Canadian carbon capture and storage assignment called Polaris, which will connect to its energy and chemical park in Alberta.
BP has lowered some of its emissions targets over the next year.
BP’s carbon dioxide emissions in 2023 will rise for the first time since 2019, largely thanks to booming oil production and some transient operations. These calculations come with the emissions created through the use of their products.
Its renewable energy and plant fuels segment lost $315 million in the second quarter of this year. Meanwhile, BP’s oil production and exploitation unit generated about $3. 3 billion in profits in the second quarter of 2024.
Last Tuesday, BP’s new chief executive, Murray Auchincloss, said carbon dioxide emissions from the company’s own operations fell 40% in the first and second quarters of this year compared to the first part of 2019. . He said the company remained committed to moving to an incorporated company. power system. than an undeniable incorporated oil corporation.
But environmental teams say BP’s oil and fuel profits, as well as less stringent emissions targets, come at a cost to regions and communities that will never get a percentage of the company’s profits.