BCN-11 US shale boosts output as Exxon Mobil, Chevron report mixed results

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BCN-11

US-OIL-EARNINGS-EXXONMOBIL

US shale boosts output as Exxon Mobil, Chevron report mixed results

NEW YORK, Aug 3, 2019 (BSS/AFP) – US oil giants Exxon Mobil and Chevron
reported mixed results Friday, as lower oil and natural gas prices blunted
the handsome production increases in the hot Permian Basin shale region.

Shares of both companies lost value after the results, which were released
amid volatility in the oil and stock markets.

US oil prices recovered somewhat Friday after suffering their biggest drop
in more than four years following the latest escalation in the US-China trade
war. Other petroleum-linked equities such as Halliburton and Schlumberger
also fell sharply on Friday.

The poor reception to the results on Wall Street is a “reflection of fears
of some sort of global meltdown in the global economy,” said Stewart
Glickman, an analyst at CFRA Research.

“Investors may be dubious about oil’s prospects if there’s some kind of
global recession due to the US-China trade war.”

Profits at Exxon Mobil dropped 20.7 percent from the same quarter last
year, falling to $3.1 billion. Revenues dropped six percent to $69.1 billion.

The US oil giant scored a 7.2 percent increase in oil and gas production,
citing growth in the Permian Basin and at Hebron, an offshore project in
Canada. The company also benefited from a one-time gain of $500 million due
to a favorable tax change in Canada.

But Exxon Mobil suffered significant drops in profit in chemicals and
refining due to an increase in plant “turnarounds,” lengthy planned
maintenance work, and unplanned downtime at facilities in Texas, Canada and
Saudi Arabia.

– Chevron profits jump –

Chevron, in contrast, saw profits jump 26.3 percent from a year ago to
$4.3 billion, as revenues declined 0.8 percent to $38.9 billion. As with
Exxon Mobil, the results included a one-time gain of $180 million due to the
Canada tax change.

There was an additional one-time benefit of $740 million Chevron received
as a breakup fee when it was outbid by Occidental Petroleum in a takeover
battle for major Permian Basin producer Anadarko Petroleum.
Production in the Permian has boosted overall US output to a series of
records in recent years. The basin was the prime source of growth of nearly
1.5 million barrels per day from Texas and New Mexico from January 2018 to
April 2019, according to the US Department of Energy.

Despite the surge, industry analysts caution the expansion may not be
sustainable because of field decline and infrastructure bottlenecks.

“There will come a point where production in the Permian starts to
disappoint and oil prices will rally,” Glickman predicted.

Shares of Exxon Mobil fell 0.9 percent to $71.81 in late-morning trading,
while Chevron dropped 1.3 percent to $119.20.

BSS/AFP/HR/0950