Exxon tops Q2 profit estimates, eyes value-driven acquisitions ahead

Exxon Mobil beat Wall Street estimates for second-quarter profit on Friday as higher oil and gas output and low production costs offset the impact of lower crude prices. 

The biggest US oil producer made clear that it is ready to take advantage of lower oil prices and make acquisitions, but only if it is confident that it can create additional value. 

The energy sector has struggled with price volatility as the OPEC+ group increased its production, pushing global benchmark Brent crude prices down 11 per cent in the quarter. 

Global tariffs levied by US President Donald Trump added to price weakness because they raised the prospect of a weakening global economy with knock-on effects for oil demand. 

Exxon's oil and gas production was the highest for any second quarter since the merger of Exxon and Mobil formed the company more than 25 years ago, Exxon Mobil said. 

"The second quarter, once again, proved the value of our strategy and competitive advantages, which continue to deliver for our shareholders no matter the market conditions or geopolitical developments," Exxon CEO Darren Woods said in a statement. 

Adjusted earnings during the second quarter were $7.1 billion, or $1.64 per share, surpassing consensus analyst estimates of $1.56 per share, data compiled by LSEG showed. 

Shares of Exxon declined 1.8 per cent in morning trading. 

Exxon paid $4.3 billion in dividends and repurchased $5 billion worth of shares during the quarter. The buyback figure puts the company on track to meet its annual share repurchase goal of $20 billion. 

The company's main production areas include the Permian basin, the largest US oilfield, as well as the prolific Stabroek Block off the coast of Guyana. 

The low cost of production in those fields allows them to stay profitable even during times of weaker oil prices, Exxon has said previously. 

Global production totaled 4.6 million barrels of oil equivalent per day (boepd) during the quarter, up from 4.5 million boepd in the previous three months. 

The start-up of Yellowtail, a fourth floating production, storage and offloading facility in Guyana, is anticipated next week, the company said. 

ON THE HUNT 

In a press briefing, Woods said he was keeping a high bar for potential acquisitions, searching for targets that have a similar culture to Exxon and where leaders from both companies can learn from one another. 

"We're not interested in buying volume," he said. "We're very focused on creating value." 

The Permian basin is one area of potential, given Exxon's technological work to increase oil recovery in that field, Woods said during a conference call with analysts. 

Exxon secured the lead in the Permian with $60 billion purchase of shale rival Pioneer in 2023. 

Last month, Exxon lost a legal challenge against Hess, one of its partners in Guyana, which cleared the way for rival Chevron to complete its acquisition of Hess. 

Exxon argued it had a contractual pre-emptive right to purchase Hess' 30 per cent stake in the Stabroek Block. 

Woods said Exxon sought out legal opinions from neutral, third parties about the joint operating agreement that governed the partnership between Exxon, Hess and China's CNOOC in Guyana. 

"In every case, and I mean in literally every case, we were told that our rights were clear," Woods said. 

The arbitrators said that Exxon had a commercially reasonable argument but that it relied on a narrow textual interpretation, Woods said, adding that the company would take steps to strengthen future contracts as needed. 

Earnings from oil and gas production were $5.4 billion, down from $6.7 billion in the first quarter. 

Exxon said it expects lower scheduled maintenance in its refining business during the third quarter.