BPT - Exxon Chevron look to keep cranking out cash even as earnings underwhelmed

2023-07-28 20:15:25 ET

Exxon Mobil ( NYSE: XOM ) and Chevron ( NYSE: CVX ) each posted their weakest quarterly profits in more than a year Friday, as financial results at the two top U.S. oil giants moderate after spiking in the wake of Russia's invasion of Ukraine.

Exxon ( XOM ) ended -1.2% Friday after reporting a 56% decline in net income and a 28% drop in revenues from a year earlier, while Chevron ( CVX ) closed -0.5% as sales fell nearly 30% but topped forecasts.

But Exxon ( XOM ) and Chevron ( CVX ) remain money gushers , noted Jinjoo Lee of The Wall Street Journal 's Heard On The Street, collectively paying shareholders $15.2B in Q2 through dividends and stock buybacks, in line with what they distributed a year ago when free cash flow was 3.7x higher.

Both companies reiterated Friday that they still plan on meeting their $17.5B in buyback targets this year.

While cash balances have eased off their record highs, Exxon ( XOM ) and Chevron ( CVX ) hold $29.6B and $9.6B worth of cash on their balance sheets, respectively - enough to keep funding generous payouts while still able to selectively take advantage of acquisition opportunities .

Exxon ( XOM ) and Chevron ( CVX ) have "become leaner, meaner machines, which means even middling commodity prices should translate to decent profits," Lee wrote, noting their earnings have roughly doubled compared with Q2 five years ago, when oil and gas prices roughly mirrored this past quarter.

U.S. Nymex crude oil futures ( CL1:COM ) edged higher Friday to finish at $80.58/bbl, its highest closing price since April 18 and +4.6% for the week, marking the fifth straight weekly increase for the longest winning streak since June last year.

U.S. natural gas prices ( NG1:COM ) rose 1.7% Friday but still finish -2.5% for the week, the third weekly decline in the past four weeks.

ETFs: ( USO ), ( UCO ), ( SCO ), ( DBO ), ( USL ), ( DRIP ), ( GUSH ), ( USOI ), ( NRGU ), ( UNG ), ( UGAZF ), ( BOIL ), ( KOLD ), ( UNL ), ( FCG )

Crude and product futures have seen steady support during the five-week streak as Saudi Arabia and Russia tightened supply while demand expectations gradually improved.

Signs of supply tightness also are showing up in physical markets, as inventories at the Cushing storage hub have declined by 7.5M barrels during the past four weeks, pushing stockpiles to their lowest since May .

Energy equities enjoyed a winning week, with the Energy Select Sector SPRD ETF ( NYSEARCA: XLE ) +1.8% , second best among the 11 S&P sector.

Top 5 gainers in energy and natural resources during the past 5 days: ( MARPS ) +18.8% , ( ADSE ) +16.2% , ( PDS ) +15.3% , ( BPT ) +15.3% , ( HLX ) +14.2% .

Top 5 decliners in energy and natural resources during the past 5 days: ( TPIC ) -39.5% , ( CTGO ) -29.2% , ( EOSE ) -28.2% , ( VTNR ) -19.6% , ( TRP ) -13.5% .

Source: Barchart.com

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