Exxon signals operating profits could double over the first quarter

HOUSTON (REUTERS) – Exxon Mobil on Friday (July 1) signalled that skyrocketing margins from fuel and crude sales could generate a record quarterly profit, according to a securities filing.

Energy prices have shot up this year, with oil selling for more than US$105 per barrel and petrol at about $5 per gallon in the United States. The enormous earnings are likely to ignite new calls for windfall profit taxes.

The largest US oil producer projected a sequential increase of about US$7.4 billion (S$10.3 billion) in operating profits compared with the first quarter. In the first quarter, Exxon posted a profit of US$8.8 billion, excluding a Russia write-down.

The filing indicates a potential profit of more than US$16 billion. The company’s peak quarterly profit was US$15.9 billion in 2012.

The filing showed that it expected higher oil and gas prices will add about US$2.9 billion to results. Margins from selling petrol and diesel will add another US$4.5 billion to operating profits.

“High energy prices are largely a result of underinvestment by many in the energy industry over the last several years and especially during the pandemic,” Exxon said in a statement on the profit gains.

Analysts tracked by IBES Refinitiv forecast a per-share profit of US$2.99, up from US$1.10 in the same quarter a year ago.

Official results for the period will be released on July 29, according to a summary of factors influencing the period disclosed late on Friday.

Exxon’s profits led US President Joe Biden last month to say the company and other oil majors were capitalising on an global oil supply shortage to fatten their profits. Exxon, he said, was making “more money than God” after posting its biggest quarterly profit in seven years.

This will be the first quarterly earnings report since Exxon decided to report results by four business units, giving a more detailed breakout of its petrochemical operations. The snapshot showed that margins in its chemical and speciality products units were flat in the second quarter compared with the first.

The company estimated that the impact of exiting Russia would cut oil and gas profits by about US$150 million compared with the first quarter. Exxon wrote down US$3.4 billion in Russia assets earlier this year.

The producer also signalled a contribution of about US$300 million from asset sales in the quarter.

Exxon, which lost more than US$22 billion in 2020, has been using the extra cash from higher energy prices sales to pay debt and raise distributions to shareholders. It plans to buy back up to US$30 billion of its shares until 2023.