For 1Q, profits soar at Exxon, Chevron on higher oil prices

IRVING, Texas -- Exxon more than doubled its profit in the first quarter as rising crude prices magnified the cost cuts made by the company when energy prices were tumbling.

The Irving company earned $4.01 billion, or 95 cents per share, for the three-month period, up from $1.81 billion, or 43 cents per share, a year earlier. It's the first year-over-year profit gain for Exxon since the third quarter of 2014, when the price of oil was just beginning a plunge that took it below $30 a barrel.

Analysts surveyed by Zacks Investment Research expected 85 cents per share. Exxon does not adjust its reported results on the basis of one-time events such as asset sales. Exxon's revenue surged to $63.29 billion from $48.71 billion but fell short of the $64.35 billion that analysts polled by Zacks were calling for.

Shares of Exxon Mobil Corp. rose 39 cents to close Friday at $81.65 but are still down 10 percent for the year.

Last month Exxon's new chief executive officer, Darren Woods, said the company would increase production and has a mix of projects to handle any oil price. Woods rose to Exxon's top job in January after his predecessor, Rex Tillerson, was named secretary of state by then-President-elect Donald Trump.

The earnings story was similar at Exxon rival Chevron, which posted a profit of $2.7 billion, reversing a year-ago loss of $725 million. While Exxon cut capital spending by 19 percent in the quarter, Chevron reduced capital spending by an even sharper 30 percent. Both companies have cut spending while bringing on line projects that were years in the making and are now contributing revenue.

"It's cutting costs, it's getting more for every dollar you spend, it's getting more from each well and getting it out faster," said Brian Youngberg, an analyst at Edward Jones & Co. in St. Louis. "It just shows how these companies have had to adapt to a new environment."

A barrel of U.S. crude was trading for around $49 Friday. That's half of what it sold for in June 2014 but an improvement from last year's first quarter, when the price briefly dipped below $30. An OPEC agreement to cut production helped push oil above $50, but the price has fallen this month on concerns about increased U.S. drilling and questions about how long OPEC will maintain its cuts.

Chevron Chief Executive Officer John Watson said in a statement that increases in oil prices helped the company's results compared with a year ago. Watson said Chevron continued to "make good progress" on reducing its operating expenses, which it cut by 14 percent to $5.53 billion.

During a conference call to discuss Chevron's results, Chief Financial Officer Pat Yarrington said Chevron was "seeing great efficiency" as it works to control capital expenses.

Investors showed some mild support for Chevron, as the company's shares rose $1.23, or 1.2 percent to close Friday at $106.70. For the year, Chevron shares have shed almost 10 percent of their value.

"In both cases, [Exxon and Chevron] the earnings beat was largely from pricing rather than production," said Pavel Molchanov, an analyst at Raymond James Financial Inc. in Houston. "Pricing is ... not something that companies can themselves control."

Information for this article was contributed by The Associated Press, Joe Carroll of Bloomberg News and Rex Crum of The Mercury News.

Business on 04/29/2017

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