Exxon Mobil Stock Surges After Energy Giant Drills to Record Profit

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Exxon Mobil’s net income in the quarter hit $17.9 billion. Dean Mouhtaropoulos/Getty Images

Soaring energy prices and increased production helped Exxon Mobil shatter its previous record for quarterly profit as the oil and gas giant posted earnings Friday far ahead of even Wall Street’s most bullish estimates.

Shares in Exxon (ticker: XOM) surged 4% on Friday. The stock had ticked up almost 2% ahead of the release after peer Chevron (CVX) also reported an earnings beat and new profit record.

Exxon posted net income under generally accepted accounting principles of $17.9 billion for the second quarter, delivering a profit of $4.21 a share. Wall Street had been expecting $15.2 billion in net income, or profit-per-share of $3.76. The nearly $18 billion in earnings represents a new quarterly record for Exxon, surpassing the previous high of $15.9 billion in 2012. It was nearly four times as high as in the second quarter last year.

“Earnings and cash flow benefited from increased production, higher realizations, and tight cost control,” Darren Woods, the group’s chairman and CEO, said in a statement.

Exxon benefited from soaring margins for refined products like gasoline and diesel, which have been in short supply since Russia’s invasion of Ukraine due to sanctions and a lack of global refining capacity. After losing money in its downstream segment — which includes chemicals and refining operations — in the first quarter, earnings surged to $5.2 billion in the second.

Those profits have attracted government scrutiny, given high gasoline and diesel prices. The Biden administration has been pressuring oil and gas companies to boost refining to help lower prices. Exxon said it is working to expand refining capacity.

“We’re also helping meet increased demand by expanding our refining capacity by about 250,000 barrels per day in the first quarter of 2023 — representing the industry’s largest single capacity addition in the U.S. since 2012,” Woods said. Exxon will expand a Texas refinery, boosting its capacity on the Gulf Coast by 17%.

Some analysts expect all this cash flow will result in bigger payouts to investors.

“While little incremental was said pertaining to shareholder returns, we assume the base dividend could be slightly boosted along with the potential for incremental share buybacks,” wrote Truist analyst Neal Dingmann.

Write to Jack Denton at jack.denton@dowjones.com