Page 5 - NorthAmOil Week 18 2022

NorthAmOil COMMENTARY NorthAmOil

of production following expiration of the Rokan in the first quarter fell short of analyst expecta-
concession in Indonesia and “unfavourable tions. Analysts are reported to have pointed to
entitlement effects” owing to higher prices. disappointing cash flow levels and derivative-re-
“Chevron is doing its part to grow domestic lated losses in particular, according to Reuters.
supply, with US oil and gas production up 10% And Jefferies described Chevron’s results as the
over first quarter last year,” stated Chevron’s “most underwhelming” in the sector so far this
chairman and CEO, Mike Wirth. “Consistent earnings season. Separately, an Edward Jones
with our plans, we’re investing to grow both energy analyst, Faisal Hersi, described the first
traditional and new energy business lines,” he quarter as “mixed” for ExxonMobil, with the
added. super-major’s solid chemicals performance off-
Unlike ExxonMobil, Chevron does not have set by “weaker results in upstream exploration
exploration and production operations in Rus- and production and international downstream
sia, limiting its exposure to Western sanctions refining and marketing”. Unlike
against Moscow. However, it still has some expo- Chevron said “foreign currency effects” had
sure owing to operations such as a 15% stake in reduced its earnings by $218mn, while Exxon- ExxonMobil,
the Caspian Pipeline Consortium, which carries Mobil said its revenues were $1.3bn lower than Chevron does not
crude from Kazakhstan through Russia to the they could have been, owing in part to derivative
Black Sea via a pipeline that is majority-owned positions and negative timing. have exploration
by Russia’s Transneft. However, Chevron has These aspects of their performance illustrate
maintained that oil from Kazakhstan remains the fact that high crude prices alone will not and production
important to global supply in light of current necessarily be enough to meet performance
events in Ukraine. expectations, and that there are certain head- operations in
The super-major reported a net charge of winds whose impact will continue to be closely Russia.
$1.01bn for the first quarter, which was larger watched.
than a $978mn charge a year earlier. As the quarterly earnings season contin-
According to Wirth, the company is consid- ues, the industry as a whole is warning of
ering additional investments in renewable fuels the impact of rising costs, which threatens to
and LNG as it weighs how best to meet rising complicate efforts to ramp up production in
demand while also pursuing energy transition line with rising global demand, especially for
initiatives. non-Russian oil. This dynamic is anticipated
to affect small and large producers alike, but at
Falling short the same time the industry as a whole can be
Despite their high profits, certain aspects of expected to benefit from higher crude prices
both ExxonMobil and Chevron’s performance in the first quarter and beyond.™

Week 18 05•May•2022 www. NEWSBASE .com P5