By Sabrina Valle
(Reuters) -Exxon Mobil on Friday posted a better than expected $9.2 billion second-quarter profit based on rising oil prices and volume gains from its purchase this year of shale oil firm Pioneer Natural Resources.
Exxon delivered a $2.14 per share profit that beat analysts' estimates on oil production and pricing gains that offset refining weakness. Results mirrored profit beats by rivals BP, Shell and ConocoPhillips.
Higher profit "was driven by record production both in Guyana and in the Permian," which offset lower natural gas and fuel prices, Chief Financial Officer Kathryn Mikells said.
Net income was $9.24 billion, up from $7.88 billion a year ago, largely on higher oil prices and gains from asset sales that offset weaker refining earnings.
Shares were up 1.3% in pre-market trading from $116.95 on Thursday.
The company warned the Golden Pass LNG joint venture development project stalled by the lead contractor's bankruptcy would be delayed until late 2025. Exxon owns a 30% stake in the project and had earlier expected a first-half startup.
US SHALE BOOST
The profit boost from the Pioneer purchase highlighted how quickly Exxon was able complete the $60 billion deal compared to rivals. Chevron and ConocoPhillips' acquisitions are still waiting on regulatory reviews. Chevron this week indicated the closing of its Hess purchase may not happen until the second half of next year.
Exxon, a partner with Hess in Guyana, has challenged Chevron's deal and its arbitration claim should be resolved by September 2025, Mikells told Reuters in an interview, later than Chevron has signaled.
The top U.S. oil producer raised its 2024 output target by 13% to 4.3 million barrels of oil equivalent per day (boepd) following the Pioneer deal, Mikells said. Exxon produced 3.74 million boepd in 2023.
"We already see a line of sight of greater synergies" than expected when Exxon announced the transaction, Mikells said, adding that any updates would be disclosed in December.
REFINING WEAKER
Profits from pumping oil and gas jumped 25% over a year ago to $7.1 billion while those from the company's gasoline and diesel business fell 32% to $946 million. Chemicals profits were flat at $779 million in the quarter.
Expenses rose modestly with capital spending of $7.03 billion, including $700 million in spending on assets acquired from Pioneer, up from $6.17 billion in the same quarter a year ago.
Exxon increased its annual capital expenditure guidance to $28 billion from the previously estimated $23-$25 billion.
The results also showed higher cash flow from operations which will help fund higher share buybacks and dividends. Cash flow from operations climbed to $10.5 billion, from $9.4 billion a year ago.
The company plans to buy back $19 billion in shares this year, the largest share repurchase program among its top Western rivals, up from $17.4 billion last year.
Oil and gas production in the second quarter grew by 15% from the previous quarter, or 574,000 boepd, including the added Pioneer contribution. Exxon had anticipated that Pioneer would add 500,000-550,000 boepd of output in the quarter.
Its Guyana operations, which were expected to produce about 600,000 boepd this year with partners, posted peak production in May, with a record of 663,000 boepd.
The company plans to deliver cumulative savings of $5 billion through the end of 2027 versus 2023, including $1 billion in cost cuts during the second quarter.
(Reporting by Sabrina Valle; Editing by Christian Schmollinger and Mark Potter)