Exxon beats Q3 profit estimates on higher Guyana, Permian production

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By Sheila Dang

HOUSTON (Reuters) -Exxon Mobil beat Wall Street estimates for third-quarter earnings on Friday, underpinned by higher oil and gas production in Guyana and the Permian Basin, which offset lower oil prices.

Adjusted earnings during the July-to-September quarter were $8.1 billion, or $1.88 per share, beating analysts’ consensus estimate of $1.82 per share, according to data compiled by LSEG.

Free cash flow, however, declined to $6.3 billion from $11.3 billion in the same quarter last year as the top U.S. oil producer spent more to acquire additional acreage in the Permian Basin. The company’s shares declined as much as 1.8% in Friday trading before reversing the losses later in the day.

Higher expenditures counteracted what was otherwise positive earnings news that included a dividend increase, wrote TPH & Co analyst Jeoffrey Lambujon.

Global oil producers have experienced a rocky year as OPEC+ has increased its oil output while a U.S.-led tariff war has clouded the outlook for global growth and oil demand, driving oil prices down in the third quarter from a year earlier. Brent crude prices averaged $68.17 in the third quarter, down about 13% from the same period last year.

Shares were little changed at $114.64.

PRODUCTION GROWS IN KEY AREAS

Oil and gas production totaled 4.8 million barrels of oil equivalent per day, which included record output in Guyana and the Permian Basin. The figure was up from 4.6 million boepd in the second quarter. 

Earnings from upstream totaled $5.7 billion, while refining profits were $1.8 billion. 

Excluding acquisitions, Exxon said it expects its capital expenditure this year to be slightly below the low end of its $27 billion to $29 billion guidance range. 

The company recorded $510 million in restructuring costs during the quarter.

While crude prices have been down, average U.S. natural gas prices over the quarter rose about 38% from last year. 

TECHNOLOGY, DIVIDENDS AND SHARE REPURCHASES

During a conference call with analysts, Exxon CEO Darren Woods said the company is continuing to invest in developing technology to increase the amount of oil it can pull out of the ground, as well as evaluating acquisition opportunities because it sees strong energy demand growth in the future.

“The industry has to bring on more barrels just to stand still,” Woods said. “That goes into our thinking in terms of what’s needed from an investment standpoint, and really keeps us focused on the medium- to long-term rather than the very short-term.”

Exxon paid $4.2 billion in dividends and repurchased $5.1 billion worth of shares during the quarter. It is on track to meet its annual share buyback target of $20 billion.

The company raised its fourth-quarter dividend by 4% to $1.03 per share, although Exxon Chief Financial Officer Kathryn Mikells fielded a question from an analyst with Wolfe Research who wondered if the market was holding back some value recognition with a growth rate that remained “quite pedestrian.”

“We feel like we’re in a pretty good place,” Mikells responded, adding that the company takes a long-term approach and compares its shareholder return program with other international oil companies and across the broader market. 

“We’re very mindful of the commitment we have on our dividend and the context in which that commitment will play out over the years as you move through commodity cycles,” Woods continued.

(Reporting by Sheila Dang in HoustonEditing by Sonali Paul, Mark Potter and Nick Zieminski)