Profits up at Exxon and Chevron

Renewed strength in refining and chemicals led to higher-than-expected fourth-quarter earnings for Exxon Mobil and Chevron, the two largest US oil companies.

A flood of oil produced from US shale formations has pushed refining margins higher for many companies with plants in the US, while chemical producers are benefiting from the low price of natural gas, a key feedstock.

Exxon’s overall profit was $9.95 billion, or $2.20 per share, compared with $9.4 billion, or $1.97 per share, in the same period a year earlier, as its refining arm’s earnings quadrupled to $1.77 billion.

“As we look at just our US Gulf coast refining circuit, we have more than tripled the processing of advantaged North American crude over the last couple of years, David Rosenthal, Exxon’s investor relations executive, told analysts.

Exxon’s refining margins were also boosted by cheaper Canadian crude oil, Mr Rosenthal said.

Chevron chief executive John Watson said its refineries in Utah and British Columbia had been processing low-priced North American crude, though transporting it to its Mississippi plant or to its two West Coast refineries had been a bigger challenge so far.

“We have moved a little bit there, but it is a longer haul so it is not clear that we will be able to take advantage of it in that way,” Mr Watson said.

Chevron reported a rise in net income to $7.2 billion, or $3.70 per share, from $5.1 billion, or $2.58 per share, a year earlier – though the latest profit included a $1.4 billion one-time gain.

Chevron’s refining operations made a profit of $925 million, compared with a loss of $61 million a year before.

Increasing output from the wellhead, on the other hand, has been a struggle in the past year for big oil companies. Shares of ConocoPhillips fell on Thursday after its production outlook disappointed investors. – (Reuters)