HOUSTON, Oct 24 (Reuters) – U.S. upstream oil companies are expected to bank 68% higher free cash flows per barrel produced in 2022 as surging prices fuel profits, while output growth lingers at 4.5% year to date, Deloitte consultancy said on Monday.
The study illustrates the clash between the White House and oil companies over how skyrocketing profits from high energy prices should be allocated.
Exxon Mobil Corp (XOM.N) and Chevron Corp (CVX.N) are expected to post strong upstream quarterly results on Friday, with some analyst expecting a new round of increase in dividends and buybacks.
Exxon and rivals this year have posted sky-high earnings on rising energy prices and demand aided by cost-cutting. Gas prices, in particular, have soared this year on strong demand from Europe since Russia’s invasion of Ukraine.
In the third quarter, U.S. natural gas prices averaged $7.95 per million British thermal units (mmBtu), up from $7.17 mmBtu in the second quarter. Brent prices eased to $98 per barrel in the same period, from an average of $109 between April and June. Exxon’s official results are due on Oct. 28.
The snapshot showing more stellar profits comes after Exxon Chief Executive Darren Woods and U.S. Energy Secretary Jennifer Granholm clashed over White House criticism of fuel prices last week.
In a breakdown of individual business units, Exxon indicated natural gas boosted operating results by about $2 billion, offsetting an about $1.6 billion decline in oil profits. Earnings from pumping oil and gas could reach about $13 billion, compared to Wall Street’s forecast of a $10.1 billion operating profit.
Weak refining margins reduced profits from selling gasoline and diesel by about $2.6 billion, offset by lower maintenance costs and an additional business day during the quarter. Operating profit could fall to about $3.4 billion from $5.3 billion in the second quarter, the filing indicated.
Chemical results also will slip by about $300 million from the prior period’s $1.07 billion operating profit, and motor oil results will double to about $800 million, offsetting the chemicals drop, the filing showed.
Overall, a tally of changes show an operating profit of about $17.8 billion, above IBES Refinitiv forecast of a $14.68 billion, or $3.44 per share, profit. Exxon earned $17.9 billion, or $4.21 per share, an all time record, in the prior quarter.
