Exxon Mobil exceeds profit expectations thanks to strong shale oil production

Exxon Mobil has exceeded Wall Street expectations with its quarterly results. Despite a challenging market environment characterized by declining demand and weak margins, the company reported a profit decrease of merely 5% year-over-year. This contrasts with significantly larger declines at competitors such as BP and TotalEnergies. In the third quarter, Exxon achieved a profit of $8.61 billion, slightly below the $9.07 billion from the previous year. However, earnings per share were $1.92, above analysts' forecasts of $1.88, due to higher oil and gas production and controlled spending. Exxon CFO Kathryn Mikells highlighted the company’s new production records, with an increase in oil and gas production by about 25% to 4.6 million barrels per day. Prior to the release of the results, Exxon had indicated a potential drop in operating profit, prompting analysts to lower their earnings forecasts by nearly ten cents per share. Exxon shares rose 1.9% to $119 per share in pre-market trading. The significant production increase is attributed to the acquisition of Pioneer Natural Resources in May. This $60 billion deal boosted production in the largest shale oil basin in the U.S. to nearly 1.4 million barrels of oil and gas daily. The released funds enable Exxon to raise its dividend by 4%, in contrast to competitors like Saudi Aramco and Chevron, which have had to incur debt this year to maintain their dividend policies. Although Exxon has not provided a forecast for the fourth quarter, the company plans to present an updated production outlook next month. With a potential additional supply of 180,000 barrels per day from OPEC, the market remains tense regarding the balance between supply and demand. Earnings from gasoline and diesel production fell to $1.3 billion, a decline compared to $2.44 billion the previous year. This was partly due to weak margins and the shutdown of a refinery in Illinois, which impacted operating results by an estimated $250 million. Despite this challenge, Mikells remains optimistic about the refining business, as refinery margins have remained nearly twice as high since 2019.