Exxon, Chevron top Q3 profit expectations as US oil output hits record high
Exxon profits down 5% yr/yr, Chevron's off 21% on weak refining
But US oil majors outrun European rivals that bet on renewables
Oil output gains set to be tested by slowing demand growth
Adds graphic, updates shares in paragraph nine
By Shariq Khan
NEW YORK, Nov 1 (Reuters) -U.S. oil producers Exxon Mobil XOM.N and Chevron CVX.N posted better-than-expected third-quarter profits on Friday, outperforming their European rivals, as record U.S. oilproduction cushioned the blow from a plunge in fuel margins.
The two focused on expanding oil and gas production as rivals BP BP.L and Shell SHEL.L spent heavily on wind, solar and renewables that have yet to pay off. Both U.S. oil firms have meanwhile benefited from acquisitions of smaller oil producers.
Still, their surging production could soon face a challenge from uncertain demand, especially in top oil importer China, and the potential for OPEC to lift production curbs as soon as next month. The group is expected to delay a plan to add 180,000 barrels per day amid concerns over weak demand and oversupply.
Exxon pumped a record 4.6 million barrels of oil equivalent per day (boepd) in the third-quarter, up more than 24% from a year-ago, as its $60 billion bet on Pioneer Natural Resources and purchase of Denbury paid dividends.
Chevron, whose $53-billion takeover of Hess HES.N has been held up, posted a 7%increase in third-quarter output to 3.36 million boepd, mostly from gains in its U.S. shale business which pumped a record 1.61 million boepd. It added a drilling rig in the Permian basin last quarter and will begin a production expansion in Kazakhstan next quarter.
Both companies reported lower year-over-year profits as weak global refining margins that hit BP and TotalEnergies TTEF.PA hard and also cuttheir oil earnings. Exxon's third-quarter profits were 5% lower than last year, while Chevron's fell 21%.
But theirdeclines were smaller than Wall Street expectations and not as steep astop European rivals. BP this week reported a 30% drop in profits from a year ago, and TotalEnergies posted a 37% decline in adjusted net income.
Exxon's $1.92 per share profit was four cents higher than Wall Street's outlook, whereas Chevron's $2.51 per share adjusted income was well ahead of analysts' average estimates of $2.42, according to LSEG data.
Chevron shares gained 3.1% to $153.41 in midday trading while Exxon was largely unchanged at $116.77.
Both pumped record amounts of oil and gas from the Permian basin, the top U.S. shale field. Exxon's output from the basin, which spans across Texas and New Mexico, hit a record 1.4 million boepd.
Exxon is not planning to take its foot off the gas.
"We see tremendous opportunities to invest in profitable growth in both our existing and new businesses," said finance chief Kathryn Mikells.
Chevron said its output in the Permian jumped by 22% to a record 950,000 boepd, helped by last year's acquisition of PDC Energy, and is on track to reach 1million boepd in the field next year.
Higher output helps Exxon, Chevron beat profit estimates https://reut.rs/4ecOeva
Reporting by Shariq Khan in New York and Arunima Kumar in Bengaluru; Editing by Marguerita Choy
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