First-Quarter Profit At Exxon Reaches Record Levels

According to Exxon Mobil, it reported a record profit for the first quarter of 2016. The company's profits in the first quarter were up more than double from the same period last year, exceeding Wall Street expectations as rising oil and gas production offset a slide in energy prices.

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Despite relatively higher oil and gas prices at the moment, oil companies are still riding that wave with earnings rising thanks to strong demand and cost-saving strategies as a result of efforts to combat the Covid-19 lockdowns that occurred three years ago.

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Kathryn Mikells, Chief Financial Officer for Standard Oil of Canada, said in an interview that despite low energy prices and shrinking refining margins, SOC achieved records in the first quarter.

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According to her, more than half of the reason for the better-than-expected earnings was due to strong production growth, and less to low marketing costs. A number of new offshore developments and refineries were launched throughout the quarter, resulting in increases in crude oil and fuel volumes for Exxon.

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In comparison to 2015, it posted earnings of $11.43 billion, or $2.79 a share, up from $5.48 billion a year ago, which included a writedown because of the decision to exit the Russian market.

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The company's oil and gas production rose by nearly 300,000 barrels per day (bpd) compared to the levels of the previous year excluding the sale of assets and the departure from Russia. An after-tax writedown of $3.4 billion on Russia's oil and gas holdings was included in the results from a year ago.

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This increase is a result of the company turning on a second production platform last year, which increased production by approximately 240,000 barrels per day from a year ago, due to increased production from the Permian Basin in Texas and Guyana. A 16% drop in oil prices from a year ago was partially offset by higher volumes in recent months.

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As part of its first-quarter results, the company has also expanded its fuel production capacity. A new crude processing unit was started up at the Beaumont, Texas, refinery of the company last quarter, adding 250,000 barrels of capacity per day to the company's overall oil refining capacity.

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In the first quarter, the producer ended up with a cash balance of $32.7 billion, but Mikells said the producer does not feel the need to invest it in mergers or acquisitions.

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A deal with Exxon that can drive good returns for shareholders and offer synergies would be considered, she said. He says the company is focused on expanding its operations in the Permian, Guyana, and Beaumont refinery expansion, among other things. 

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