Exxon tops Q3 expectations as Permian Basin leads to strong oil production

Exxon Mobil (NYSE:XOM) +1.6% pre-market Friday after reporting Q3 profit that fell from a year ago but topped Wall Street expectations, helped by strong oil output in its first full quarter that includes volumes from Permian Basin shale producer Pioneer Natural Resources.

Exxon’s (XOM) board raised the quarterly dividend by 4.2% to $0.99/share from $0.95, representing an annual yield of ~3.39%, up from 3.25%, as Q3 free cash flow totaled $11.3B.

Q3 net income fell to $8.61B, or $1.92/share, from $9.07B, or $2.25/share, in the year-earlier quarter, as revenues slipped 1% to $90B

Q3 net production rose 5% Q/Q to 4.58M boe/day, including the company’s highest liquids production in more than 40 years at 3.2M bbl/day; Exxon’s (XOM) acquisition of Pioneer Natural helped lift production in the Permian Basin to nearly 1.4M boe/day, helping overcome a 17% decline in average oil prices in the quarter.

Q3 earnings by segment: Upstream fell 13% Q/Q to $6.16B, driven by lower crude realizations and higher exploration expenses, partly offset by production; Energy Products rose 38% Q/Q to $1.31B, helped by lower scheduled maintenance and favorable derivatives mark-to-market timing effects; Chemical Products rose 14.5% Q/Q to $893M, driven by improved margins from lower North America feed costs and growth in high-value product sales; Specialty Products rose 5% Q/Q to $794M, helped by higher industry basestock margins.

“We delivered one of our strongest third quarters in a decade,” Chairman and CEO Darren Woods said, also noting the company had achieved $11.3B of structural cost savings since 2019.

Separately, Exxon (XOM) completed the sale of its Fos-sur-Mer oil refinery in France, according to the buyer, a consortium that includes Trafigura Group.

The sale, announced in April, reduces Exxon’s (XOM) refining capacity in Europe to ~1.1M bbl/day, according Bloomberg, second on the continent to TotalEnergies.