"Big Oil" Earnings - Q2 2023 ($XOM $CVX)
We are watching the Shale Treadmill at oil and gas producers this quarter, starting with two of the supermajor integrated oil companies, ExxonMobil and Chevron. (See last quarter's notes.)
Exxon reports that its worldwide production of liquids was 2.35 million barrels per day, which was down 5.7% from the first quarter and up 2% versus the second quarter of 2022. Total hydrocarbon production (including natural gas) was 3.6 million barrels of oil equivalent per day, down 5.8% from the first quarter and down 3.3% from the second quarter of 2022.
Upstream capital expenditures were $4.6 billion in the second quarter versus $4.6 billion in the first quarter (so, flat) and $3.6 billion in the second quarter of 2022 (up 27% year-over-year). So with flat capex, production declined almost six percent.
Exxon drills wells in shale basins like the Permian, but they also have significant conventional production, so they are not on as bad of a capital expenditure treadmill as the pure-play shale producers.
Chevron reports that its worldwide production of liquids was 1.7 million barrels per day, which was up 1% from the first quarter and up 3% from the second quarter of 2022. Total hydrocarbon production (including natural gas) was 3 million barrels of oil equivalent per day, flat from the first quarter and up 2% from the second quarter of 2022.
Upstream capital expenditures were $3.2 billion in the second quarter versus $2.6 billion in the first quarter (up 23%) and $2.2 billion in the second quarter of 2022 (up 49% year-over-year). Chevron is spending huge incremental amounts on capex to keep production barely flat.
Remember that Chevron also agreed to buy PDC Energy, Inc. and that deal is supposed to be closing this quarter. PDCE was one of the worst producers in our Shale Treadmill study, with capex was up 94% year-over-year in the first quarter but delivering total production was down 3.3% with oil production down 6%.
Upcoming earnings reports for other producers:
- August 1 (Tuesday) - PXD
- August 2 (Wednesday) - PDCE, CHRD, MRO, OXY
- August 3 (Thursday) - SU, CNQ, COP
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P.S.:
Exxon is acquiring Denbury:
https://corporate.exxonmobil.com/news/news-releases/2023/0713_exxonmobil-announces-acquisition-of-denbury
It's a small acquisition - Denbury is $4.9 billion and XOM's market capitalization is $420 billion, almost 100 times larger.
Denbury produces 97% oil.
For the first quarter of 2023, Denbury's oil production was up 2% year-over-year and capital expenditures were up 60%.
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