ExxonMobil cashed in on the recent surge in oil prices by ramping up output in the booming Permian Basin of Texas.
The results represent a sizable improvement for Exxon, which has been forced to play catch-up after being late to America’s shale revolution.
The largest American oil company reported a 57% jump in profit on Friday, besting Wall Street’s expectations. Exxon’s (XOM) bottom line enjoyed a $2.6 billion boost from a spike in oil prices relative to the prior year.
Exxon’s cash flow from operating activities climbed to a four-year high of $11.1 billion. That signals a much-needed improvement after Exxon’s balance sheet came under pressure during the crash in oil prices that began in 2014.
Exxon lost its AAA credit rating in 2016 after 67 years.
Exxon showed some glimmers of hope on the production front, a recent sore spot given the spike in US oil output.
The company’s global oil output inched slightly higher to 2.3 million barrels per day. It had been down in eight of the prior nine quarters.
That growth was led by an acceleration in American production growth to 11%. Exxon is now producing 555,000 barrels of oil in the United States each day.
Exxon pointed to new contributions from the Permian Basin, the shale hotspot that has made the United States the world leader in production. While Exxon was late to the shale boom, it spent $5.6 billion in early 2017 to buy assets in the Permian. Those bets are starting to pay off. Exxon said it has ramped up to 38 rigs in the Permian.
“We expect to continue to increase volumes over time as we ramp up activity in the Permian and new projects start up,” Exxon CEO Darren Woods said in a statement.
However, Exxon’s overall oil and gas output declined 2% from the prior year, led lower by shrinking natural gas volumes. European gas output tumbled 24%. Exxon’s total production has only increased once in the past 10 quarters.
Exxon rival Chevron is growing much faster. Chevron revealed on Friday that its total oil and gas production increased by 9% last quarter to a record high. Oil output jumped 25%, led of course by the Permian Basin.
Chevron’s success allowed the company to more than double its third-quarter profit to $4 billion. Cash flow from operations soared to a five-year high. And Chevron, unlike Exxon, is rewarding shareholders with what they want: buybacks. Chevron said it repurchased $750 million of stock last quarter.