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Exxon joins Hess in touting increased oil profits in Guyana
Kaieteur News – As the second quarter of 2024 came to a close, ExxonMobil, along with Hess, boasted of a growth in its oil profits.
ExxonMobil CEO Darren Woods.
The company released its second-quarter earnings report on Friday (August 2), with total revenue of $9.2 billion.
According to the report, this equates to “$2.14 per diluted share.”
Chief Executive Darren Woods attributed the profit to the Guyana operation, saying: “Our low-cost Permian and Guyana assets achieved record quarterly production, the highest oil production since the Exxon and Mobil merger. Our high-value product sales also set records, up 10% over the first half of last year.”
Cash flow from operating activities was $10.6 billion, and cash flow from operating activities excluding changes in working capital was $15.2 billion. Stockholder distributions were $9.5 billion, including $4.3 billion in dividends and $5.2 billion in share repurchases, consistent with the company’s announced plans.
“We delivered our second-highest second quarter earnings of the past decade as we continue to improve underlying profitability. Our transformative merger with Pioneer was completed in half the time of similar transactions. We are also continuing to build businesses such as ProxximaTM, Carbon Materials and virtually carbon-free hydrogen, with approximately 98% CO2 emissions, which will create value long into the future,” Woods said.
Upstream earnings so far in 2024 are $12.7 billion, up $1.7 billion from the same period last year.
“The prior-year period was impacted by identified items related to tax. Excluding identified items, earnings increased $1.5 billion driven by quality asset volume growth driven by record Guyana, conventional Permian and Pioneer production,” the report said.
Net production for the year to date is 4.1 million boe/d, which the company highlighted as an increase of “9%, or 352,000 boe/d.” Higher crude oil realizations and structural cost savings offset lower natural gas realizations, higher depreciation expense, and a lower base due to non-strategic divestitures and government-mandated production cuts.
Additionally, “Second quarter earnings were $7.1 billion, up $1.4 billion from the first quarter, driven by the Pioneer acquisition, record production in Guyana and the conventional Permian, and structural cost savings. Higher crude oil realizations and divestment gains more than offset lower natural gas realizations. Second quarter net production was 4.4 million b/d, up 15%, or 574,000 b/d, from the prior quarter, driven by production growth in Pioneer, Guyana, and the conventional Permian.”
On Wednesday, Reuters reported that “Hess Petroleum Corp. on Wednesday reported second-quarter profit that beat expectations, helped by a sharp increase in Guyana oil production and higher oil prices. Hess’s oil and gas production rose 27.6% to 494,000 barrels per day (boepd), while Guyana’s oil and gas output increased nearly 75% year-on-year to 192,000 boepd.”
“The South American country and its lucrative oil assets are at the heart of the dispute between Hess and Chevron. https://www.reuters.com/markets/companies/CVX.N and ExxonMobil. In October last year, Hess agreed to sell itself to Chevron for $53 billion in stock, but the company declined to comment due to regulatory scrutiny and Challenged ExxonMobil claims rights to Hess’ assets in Guyana,” Reuters added.
Chevron and ExxonMobil will attend an arbitration hearing in May 2025, the latest development in their ongoing dispute over the massive Stabroek Block oil field off the coast of Guyana.
Chevron said in a filing with the U.S. Securities and Exchange Commission on Wednesday that it expects a decision within three months of the hearing. The Houston-based company also said it had expected and requested an earlier hearing but that it could not be held earlier because of the parties’ overlapping schedules.
The two companies have been locked in a dispute since February when Exxon threatened to block Chevron’s acquisition of a 30% stake in the Stabroek block, which is said to contain at least 11 billion barrels of oil. The ongoing arbitration hinges on the applicability of a “right of first refusal” contained in an operating agreement between Exxon, Hess and a subsidiary of China National Offshore Oil Corporation.
The scrapping of the deal could call into question Chevron’s $53 billion takeover of rival Hess, which closed in October. Chevron said in the filing that its views and those of Hess remain unchanged, while claiming that Exxon and CNOOC “continue to disregard the express language of the operating agreement.” Exxon operates all production in Guyana, controlling a 45% stake, while Hess and CNOOC serve as minority shareholders. Exxon and CNOOC Ltd. filed the arbitration, claiming a right of first refusal over any sale of Hess’ lucrative stake in the Guyana oil production joint venture.
The challenge threatens to derail Chevron’s biggest deal since its $36 billion purchase of Texaco in 2001. Exxon and CNOOC have argued that Chevron’s bid for Hess triggered a right-of-first refusal clause in their Guyana joint operating agreement. Chevron and Hess dispute that assertion. The all-stock sale, announced last October, was put on hold by a second request for information from the U.S. Federal Trade Commission, an antitrust regulator. A Hess spokesman said the review should be completed this quarter.
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