Strength in refining and chemicals led to higher-than-expected fourth-quarter earnings for Exxon Mobil Corporation and Chevron Corporation, the two largest United States oil companies.
A flood of oil produced from US shale formations has pushed refining margins higher for many companies with plants in the United States, while chemical companies are benefiting from the low price of natural gas, a key feedstock, according to Reuters.
Brian Youngberg, energy company analyst with Edward Jones in St. Louis, said bigger-than-expected refining earnings “were a common theme for this quarter” for Exxon and Chevron.
Exxon’s overall profit was $9.95bn, or $2.20 per share, compared with $9.4bn, or $1.97 per share, in the same period a year earlier, while its refining arm’s earnings quadrupled to $1.77bn.
“As we look at just our US Gulf coast refining circuit, we have more than tripled the processing of advantaged North American crude over the last couple of years,” David Rosenthal, Exxon’s investor relations executive, told analysts.
Chevron’s net income grew to $7.2bn, or $3.70 per share, from $5.1bn, or $2.58 per share, a year earlier – though the latest profit included a $1.4bn one-time gain.
Chevron’s refining operations made a profit of $925m, compared with a loss of $61m a year before.
Increasing output from the wellhead, on the other hand, has been a struggle in the past year for big oil companies. Shares of ConocoPhillips fell on Thursday after its production outlook disappointed investors.
Exxon’s oil and gas output fell five per cent to 4.29 million barrels oil equivalent per day, while Chevron managed an increase to 2.67 million bpd after a year of underperformance.
Ernie Cecilia, chief investment officer at Bryn Mawr Trust and a Chevron shareholder, noted Conoco was struggling while its spun-off refining arm, Phillips 66, did well in what remains a highly cyclical business.
“The refining side can be a two-edged sword, being a tailwind as well as a headwind,” Cecilia said.
Shares of Exxon declined by 0.4 percent to $89.65 in early trading on the New York Stock Exchange, while Chevron shares rose 0.6 percent to $115.83.