The oil and gas boom has been nicely illustrated by Exxon Mobil’s announcement that its March-quarter results will get close to a near record $US11 billion.
And that in turn is a very good tip that the sector globally will report booming profits for the March quarter and the April period as well.
Australian majors like Woodside, Santos and the mini, Beach, will report sharply higher revenues for the quarter in the quarterly production and exploration reports later this month. Beach releases its March quarter data on April 20 and Woodside and Santos around April 29.
That will be due to a heady cocktail of already high prices before Putin’s invasion of Ukraine, the trade sanctions that followed, shipping disruptions and surging demand.
Exxon said that its first-quarter results may have been as much as $US2 billion higher than earnings during the final three months of 2021, when the company earned $US8.8 billion.
Surging oil prices were the main driver, with natural gas and fatter refining margins also contributing. Brent crude futures touched a 14-year high of almost $US140 a barrel during the quarter.
The jump in oil prices alone will boost by nearly $US2.3 billion from the company’s 4th quarter. US oil prices increased by a third in the March quarter while the company says the rise in natural gas prices could add another $US400 million in earnings.
The $US2 billion or so surge in earnings Exxon is expected will go some way to softening the $US4 billion plus cost of exiting the only big Russian project the company was involved in at Sakhalin in far eastern Russia.
And there is also a growing movement in the US that objects to energy companies profiteering from the windfall gains.
Key Democrats in the US House of Representatives have demanded Exxon and rivals Chevron, Shell and BP immediately halt dividends and share buybacks until the war’s conclusion, and criticising them for “profiteering off the crisis in Ukraine.”
That’s a touch stupid because BP was the first major company to withdraw from Russia and the cost could be as high as $US20-$US25 billion in write downs and impairments on its huge Russian oil investment and producing facilities. Shell is taking a write down of $US3 billion.
The critics have also criticised Exxon and the other three oil explorers of collectively spending $US44 billion on buybacks and dividends last year and planning to shell out another $US32 billion in 2022. All of those well and truly pre-dated the Putin invasion.
Some companies were due to appear before the US congress on Tuesday to be questioned on these issues – where the politicians might strike more fertile ground is pressuring the companies about current and future investment plans in the light of the surge in prices and profits and calls from the Biden administration and other countries for Big Oil to boost future output by investing and spending more instead of paying dividends and doing buybacks from now on.
