Page 6 - NorthAmOil Week 44

NorthAmOil COMMENTARY NorthAmOil
Permian boosts super-majors’ third-quarter performances
ExxonMobil and Chevron both recorded third-quarter drops in their earnings, but saw their performances boosted by activity in the Permian Basin
US
WHAT:
The Permian Basin was identified as a strong performance area by both ExxonMobil and Chevron in their third-quarter results.
WHY:
Both super-majors
are using the region to drive production growth despite persistently low oil prices that are taking a toll on performance.
WHAT NEXT:
The companies are warning about the potential impact of a future US fracking ban under a Democratic president.
THE Permian Basin was a bright spot in the performances of both ExxonMobil and Chev- ron when the two unveiled their results for the third quarter of 2019. Certain aspects of the two super-majors’ results still exceeded analyst expectations, despite these being increasingly bearish amid slowing global demand growth and persistently low crude prices.
ExxonMobil reported estimated third-quar- ter earnings of $3.2bn, or $0.75 per diluted share. This marked a 49% y/y decrease from earnings of $6.2bn, or $1.46 per share, in the third quarter of 2018.
The company’s adjusted earnings per share came in at $0.68, exceeding analyst expectations of $0.67. By contrast, Chevron’s earnings per share were $1.36, falling short of analyst esti- mates of $1.45. But Chevron’s adjusted earnings per share when excluding foreign exchange gains and tax-related charges beat expectations, reach- ing $1.55 per share.
Chevron’s earnings also fell y/y, however, at $2.6bn, or $1.36 per diluted share, in the third quarter of 2019 compared with $4.0bn or $2.11 per diluted share the previous year.
Bright spot
Declines in quarterly earnings for both super-majors were partly offset by their drives for growth in the Permian Basin. ExxonMobil said its production from the Permian was up 7%
on the previous quarter and up more than 70% from the third quarter of 2018. The super-ma- jor’s performance in the Permian helped boost its total liquids output growth by 4% y/y in the third quarter of 2019, while its natural gas production went up 1% over the same period. Its combined output grew 3% compared to the third quarter of last year, to 3.9mn barrels of oil equivalent per day (boepd).
The super-major still has a long way to go with its ambitious Permian growth plans. Exx- onMobil’s vice-president of investor relations, Neil Hansen, estimated on the company’s earn- ings call that it had only drilled a few hundred wells to date from an inventory in excess of 8,000. ExxonMobil is aiming to achieve 1mn boepd of output from the Permian by 2024.
Chevron, for its part, reported net production of 934,000 boepd in the third quarter of 2019, up by 103,000 boepd from a year earlier. It noted output increases from the Permian in particular, though it added that these were partially offset by declines from its base business.
The net liquids component in Chevron’s output rose 11% y/y to 726,000 barrels per day (bpd), while its net gas output grew 17% to 1.24bn cubic feet (35.1mn cubic metres) per day over the same period.
Chevron’s unconventional net production in the Permian reached 455,000 boepd, rep- resenting growth of 35% compared with the
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w w w . N E W S B A S E . c o m Week 44 05•November•2019