ExxonMobil and Chevron report fourth-quarter earnings declines

US oil majors knocked by tighter margins, chemicals weakness and writedowns

ExxonMobil and Chevron both reported declines in quarterly earnings on Friday as the two biggest US oil groups were weighed down by a raft of factors ranging from tighter margins to writedowns.

Exxon, the country’s largest oil company, reported its poorest quarterly operating earnings in three years in a set of results that was dragged down by slim oil refining margins and a rare loss in its chemicals business.

Rival Chevron, meanwhile, booked a hefty fourth-quarter loss following a previously flagged writedown of more than $10bn associated with the sale of shale gasfields in the prolific US Appalachian region, alongside other businesses.

Exxon reported net income of $5.7bn in the fourth quarter, or 1.33 per share, down from $6bn or $1.41 per share a year earlier.

The group’s results were buoyed by one-off items worth about $3.9bn, or $0.92 per share, largely from gains involving the $4.5bn sale of Exxon properties in Norway to Var Energi late last year. Without those items, net profit was about $1.8bn or $0.41 per share — below analysts’ expectations of $0.45.

Exxon’s $355m loss in its chemicals business was its first in at least two decades, according to data from S&P Global Market Intelligence. Exxon’s oil refining business earned $898m in the quarter, down by two-thirds from a year before.

The company has been investing heavily to expand output in the Permian Basin of Texas and New Mexico, home to the most prolific oilfields in the US. Production there increased by 54 per cent on the previous year, a slower annual growth rate than the 72 per cent the company reported in the third quarter.

Its overall US liquids production, including crude oil, also rose 14 per cent to 665,000 b/d in the quarter, with the Permian alone delivering 294,000 b/d.

Chevron, the US’s second biggest oil group, posted a loss of $6.6bn or $3.51 per share, slightly ahead of analysts’ estimates. That compared to profits of $3.7bn a year previously.

The bulk of its loss was due to the December writedown of $10.4bn as it divested its Appalachian shale assets, under pressure from persistently low natural gas prices, and Kitimat LNG, a liquefied natural gas export project in Canada. The writedown also related to an impairment charge on Big Foot, an offshore oil project in the Gulf of Mexico.

Chevron reported growth of 36 per cent in the Permian to 514,000 b/d during the quarter. Overall US oil-equivalent production was 998,000 b/d during the quarter, up 140,000 b/d, or 16 per cent, from the previous year.

The US energy majors’ results came a day after Royal Dutch Shell reported an almost 50 per cent drop in fourth-quarter profits caused by lower oil and gas prices.