Exxon Mobil Corp (NYSE:XOM) reported a third quarter (Q3) profit of $9.1 billion, marking a 54% decrease year-on-year (YoY), but revealing an improvement from the second quarter (Q2) due to recovering oil prices. The company's Q3 earnings per share stood at $2.25, falling below the London Stock Exchange Group (LON:LSEG) consensus of $2.37 per share. This is a decline from $4.68 in the same quarter last year when Russia's invasion of Ukraine instigated a surge in oil and gas prices.
The U.S. oil giant's earnings were bolstered by solid crude oil prices and rising post-pandemic demand for gasoline and diesel. However, weaker chemical profits and refining margins led Wall Street analysts to downgrade Exxon's Q3 outlook. The company's chemical business faced challenges due to higher raw materials costs, resulting in Chemical Products' Q3 earnings dropping from $828 million in Q2 to $249 million.
Despite these challenges, Exxon's robust performance prompted the company to enter into all-stock deals with Pioneer Natural Resources (NYSE:PXD) and Denbury as shares traded at near-record prices. The global oil price increase to an average of $85.92 per barrel in Q3, up from $77.73 in Q2, further contributed to the company's strong results.
Exxon's cash reserves have grown by 10% over Q2, reaching $33 billion, providing a buffer against future commodity cycle downturns, according to CFO Kathryn Mikells. She also highlighted the company's plans to distribute $17.5 billion in buybacks this year while maintaining its 3.7 million barrels of oil equivalent per day (boepd) production target for 2023.
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