ExxonMobil Says Q3 Earnings Were Boosted By Higher Prices, Better Margins

Rising crude oil prices added as much as $1.3 billion to ExxonMobil's (XOM) third-quarter earnings compared to the previous quarter, while improved industry margins boosted earnings from refining by up to $1.1 billion, according to estimates released late Wednesday by the company.

The company also said in a Securities and Exchange Commission (SEC) filing that earnings from its natural gas production increased as much as $600 million thanks to higher prices in the latest period compared to the second quarter. The higher estimates for its oil and gas business are partially offset by projected declines in chemicals and specialty products.

ExxonMobil's guidance provides a glimpse of the impact that rising crude oil and fuel prices have had on oil companies. ExxonMobil shares gained 15% during the third quarter, in line with gains by other energy majors.

Big oil companies like ExxonMobil earn money from both upstream operations, which involve the extraction and production of crude oil, and downstream activities, which include refining the oil and selling it to consumers at gas stations.

ExxonMobil earns roughly four-fifths of its revenue from downstream operations, namely through its gas stations. Higher prices at the pump, which rose roughly 30 cents nationwide between the start of July and the end of September, likely boosted the company's profit margins.

The latest quarter draws parallels to the first half of 2022, when surging oil prices caused by Russia's invasion of Ukraine and a rebound in global demand from pandemic lockdowns lifted energy sector profits. ExxonMobil's earnings surged to a record $55.74 billion last year, more than doubling from 2021.

Analysts estimates compiled by Visible Alpha project ExxonMobil will report third-quarter earnings of $9.4 billion, up from $7.9 billion in the previous quarter but down from $19.7 billion in the year-ago quarter.

While surging oil prices boosted energy companies' profits and stock prices in the third quarter, falling crude prices so far this quarter appear to be taking a toll.

After rising more than 28% in the third quarter, oil prices have pulled back from their September highs. The price of WTI crude—the U.S. benchmark—tumbled more than 5% yesterday after an Energy Information Administration report showed gasoline demand was weaker than expected. That sent shares of ExxonMobil down almost 4%.

ExxonMobil shares were down another 2.3% at close on Thursday, as oil prices fell further. XOM shares are up just 2.3% year-to-date.