ExxonMobil (XOM, Financial) reported better-than-expected third-quarter results, driven by increased oil production in the U.S. Permian Basin. The company's earnings per share reached $1.92, surpassing the anticipated $1.87. This performance follows favorable outcomes from Chevron (CVX) and Shell (SHEL) as well. Despite international oil price declines, ExxonMobil's stock has risen by over 15% this year, distinguishing it as the top-performing oil giant.
ExxonMobil's accelerated growth in oil and gas production at lower costs has been pivotal. CEO Darren Woods remains committed to fossil fuels, aiming to minimize costs to ensure profitability even in the face of declining demand due to energy transitions. The company has been successful in Guyana and the Permian Basin with oil production costs under $35 per barrel, while current international oil prices exceed $70 per barrel. Furthermore, ExxonMobil is advancing natural gas export projects in Texas, Papua New Guinea, and Mozambique.
After acquiring Pioneer Natural Resources for $60 billion earlier this year, ExxonMobil has become the largest producer in the Permian region. The company also raised dividends for the 42nd consecutive year to $0.99 per share, above the expected $0.97. CFO Kathy Mikells highlighted that the company funds dividends and share buybacks entirely through cash flow, maintaining $27 billion in cash reserves and a low net debt-to-capital ratio of 5%.
ExxonMobil's enhanced profitability has been well-received by investors, achieving record stock highs and quadrupling since pandemic lows. European counterparts like BP (BP) and Shell are pivoting back to fossil fuels after setbacks in low-carbon investments, while Chevron's acquisition of Hess and its entry into Guyana face arbitration hurdles initiated by ExxonMobil. However, ExxonMobil's significant refining operations confront challenges due to reduced refining margins from sluggish demand and Middle Eastern supply increases.
In the third quarter, oil production in Guyana faced a setback as ExxonMobil paused two of three production vessels to connect a gas-to-shore pipeline, but growth is expected to resume in the fourth quarter.
