ExxonMobil on Thursday said it had repurchased a further $3bn in shares during the third quarter, as the world's largest oil and gas company used high energy prices to bolster a balance sheet which is already the strongest in the sector.
The US group has led its peers in using record cash flows to pursue buybacks at a time when additional expenditure on exploration and production is becoming less attractive. Analysts at Lehman Brothers estimate that 80 per cent of the benefits of higher oil prices are being taken up by increased costs and tax changes as producing countries seek a larger slice of the spike in energy prices.
ExxonMobil has now spent $6.9bn on buybacks so far this year, well above analysts' estimates.
The company said its net profits climbed from $3.65bn to $5.68bn in the three months to September 30, with earnings per share of 88 cents. The quarter included a $550m after-tax charge against a legal settlement arising from over-charging wholesale gasoline customers.
Excluding the charge, earnings per share were 96 cents, nine cents higher than analysts’ consensus forecast.
Capital and exploration expenses of $3.63bn were down $204m year on year.
Profits from the group’s upstream business rose to $3.93bn, compared with $3.85bn in the prior quarter. Oil and gas production climbed 1 per cent quarter on quarter as new fields in west Africa and Norway compensated for declines in mature projects. The company said it was on track to meet medium-term targets of lifting production by 3 per cent a year.
Earnings from its downstream business fell from $1.51bn to $1.4bn quarter on quarter, reflecting the dip in global refining margins from the record levels seen earlier this year. However, the cyclical recovery in the chemicals industry saw profits from that segment top $1bn for the first time, $770m above the year-ago level.
Spending on exploration and production dipped slightly compared with a year ago, though Exxon has been the most active explorer among its peers, investing $3.9bn over the past three years, according to analysts at Oppenheimer.
The company is expected to be questioned about potential changes to its capex budget at a conference call later on Thursday. BP said earlier this week that it would lift investment from $12.5bn to $14bn next year to accommodate higher costs, principally steel.
Analysts are also seeking any update on the succession plans for Lee Raymond, chairman and chief executive officer. Rex Tillerson , head of exploration and production business, was appointed president and a director of the company earlier this year, and is widely viewed as Mr Raymond's successor.