A rebound in crude prices helped the world’s energy supermajors generate higher profits in the second quarter but ultimately it was how much oil and gas they produced that differentiated their fortunes. For ExxonMobil, which was widely seen as having the worst performance of all the majors, higher prices were offset by a 7 percent drop in combined oil and gas production in the quarter from the same period last year. Paul Sankey, an analyst from Mizuho in New York, described Exxon’s results as “shocking” and said the production number underlined the need for the world’s biggest energy producer to fast-track projects.
The company, once known for its focus on costs and returns, is spending heavily with capital expenditure increasing 68 per cent from last year’s quarter. It is focusing on boosting output in the Permian Basin in the US and new offshore discoveries in Guyana, but many projects are not expected to deliver oil output until the early 2020s. Neil Chapman, senior vice-president and a member of Exxon’s management committee, emphasised the company’s focus on “value” over “volume”.
This has been the industry’s mantra over the past three years. But investors want to see output growth now. “Few investors have got the patience these days to wait for five years or more,” Mr Sankey added. These concerns weighed heavily on Exxon’s share price, which has fallen to a lower level than when Brent crude last traded below $40 a barrel in March 2016.