By Bradley Olson 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (November 3, 2018).

Exxon Mobil Corp. and Chevron Corp. each reported their highest third-quarter profits in four years as the world's largest oil companies appeared to have finally shaken off the malaise of a yearslong oil price crash.

Exxon's earnings rose 57% to $6.24 billion as improved operations helped the company reap the benefits of higher prices for drilling and better refining margins. Chevron's profit doubled to $4 billion and its production in the red-hot Permian Basin in West Texas and New Mexico surged 80%.

Shares of both companies rallied Friday, mirroring the performance of nearly all other major Western energy companies. BP PLC, France's Total SA and Norway's Equinor ASA all fared well with investors in the past week after exceeding profit forecasts.

Big oil companies' profits slumped amid a world-wide plunge in oil prices that began in 2014 and lasted several years. But prices have recovered this year, and as a result the companies saw a marked uplift to their profits in the third quarter.

Investors had been underwhelmed by Exxon and Chevron's performance before today. The companies' stock prices had fallen by about 4% in the last 12 months even as oil prices rose by about 30%. Exxon in particular had faced operational challenges, and its quarterly production reached the lowest level in a decade in the April-June period.

The company said it had made strides on those issues, and production reached the equivalent of about 3.8 million barrels a day of oil and gas in the latest quarter, a slight decline from a year earlier. Executives said new developments in areas such as Guyana and Brazil are the best projects the company has undertaken since Exxon and Mobil merged about two decades ago.

"Operational performance improved significantly versus the second quarter," Exxon Chief Executive Darren Woods said.

Profit margins also widened in the refining sector for Exxon. The company was able to buy crude in some parts of the U.S. and Canada that sold at a discount because it was landlocked after production outstripped pipeline capacity.

Chevron production set a company record of about 2.9 million barrels a day, including new output from giant natural-gas export projects in Australia and growth in North America.

Exxon and Chevron continued to significantly ramp up operations in the Permian Basin, one of the hottest oil fields in the world that has been unlocked by new fracking techniques. Exxon now has 38 rigs running in the region, and the company unit responsible for shale production reported its third-straight quarterly profit.

Chevron boosted its output in the region to 338,000 barrels a day, up about 150,000 barrels a day from the third quarter of last year. That level of growth is the equivalent of adding a midsize exploration-and-production company in the region, said Pat Yarrington, Chevron's chief financial officer.

"We think that there's upside potential here as we continue to fine-tune our well placement," she said.

Chevron sees costs increasing in the region in 2019 by 5% to 10%, she said.

--Allison Prang contributed to this article.

Write to Bradley Olson at Bradley.Olson@wsj.com

 

(END) Dow Jones Newswires

November 03, 2018 02:47 ET (06:47 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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