Second-quarter 2023 earnings down from 2022 on lower commodity prices

A sample of 48 US-based oil and gas producers and refiners recorded a total net income of $31.08 billion for second-quarter 2023, compared with earnings of $76.03 billion in the previous year’s second quarter. Total revenues were $306.13 billion for the quarter, down from $449.3 billion a year ago.

In second-quarter 2023, crude oil prices were significantly lower compared with the same period in 2022. Refined product prices and average market crack spreads also declined compared with historic highs a year ago.

Brent crude oil prices averaged $78.32/bbl in second-quarter 2023, compared with $113.54/bbl in second-quarter 2022 and $81.17/bbl in first-quarter 2023. West Texas Intermediate (WTI) averaged $73.8/bbl in second-quarter 2023, compared with $108.72/bbl in second-quarter 2022 and $76.08/bbl in first-quarter 2023.

For second-quarter 2023, US crude oil production averaged 12.67 million b/d, compared with 11.77 million b/d for the same quarter a year ago, according to data from the US Energy Information Administration (EIA). US natural gas liquids (NGLs) production averaged 6.36 million b/d during the quarter, compared with 5.92 million b/d in the year-ago quarter.

The number of active oil rigs in the US slipped to 545 at end-June from 592 at end-March, according to Baker Hughes. At the end of June 2022, there were 594 active oil rigs.

US commercial crude oil stock at the end of June was 453 million bbl, compared with 417 million bbl at the end of June 2022 and a 5-year average of 464.6 million bbl.

US oil product stock at end-June was 810 million bbl, compared with 762 million bbl at the end of second-quarter 2022 and a 5-year average of 840.0 million bbl.

The US Strategic Petroleum Reserve (SPR) at the end of June held 347 million bbl, compared with 493 million bbl at the end of second-quarter 2022 and a 5-year average of 611.6 million bbl.

US refinery inputs were 16.71 million b/d in second-quarter 2023, compared with 16.61 million b/d for the same quarter a year ago and 15.78 million b/d for the previous quarter. The refinery utilization rate was 91.5% for the quarter, compared with 92.6% for the same quarter a year ago and 87.1% in first-quarter 2023.

According to Muse, Stancil & Co., refining cash margins in second-quarter 2023 averaged $25.68/bbl for Middle-West refiners, $20.87/bbl for West Coast refiners, $21.91/bbl for Gulf Coast refiners, and $14.44/bbl for East Coast refiners. In the same quarter of the prior year, these refining margins were $41.51/bbl, $37.21/bbl, $38.92/bbl, and $35.16/bbl, respectively.

Henry Hub natural gas spot prices averaged $2.16/MMbtu in second-quarter 2023, compared with $7.48/MMbtu a year earlier, while US dry gas production for the quarter climbed to 102.78 bcfd from 97.59 bcfd a year earlier, according to EIA data.

Natural gas inventory ended the quarter at 2,912 bcf, compared with a 5-year average of 2,593 bcf. US LNG exports averaged 11.85 bcfd during the quarter, up 9.8% from the previous quarter.

The number of active gas rigs in the US decreased to 124 at end-June from 160 at end-March. At the end of June 2022, there were 157 active gas rigs.

A sample of 14 companies based in Canada, including oil and gas producers and pipeline operators, recorded collective income of $7.91 billion (Canadian dollar) in second-quarter 2023. In the second quarter of last year, this group’s combined income was $15.82 billion.

Western Canada Select (WCS) at Hardisty averaged $58.74/bbl in second-quarter 2023, an increase from $51.36/bbl in the first quarter mainly due to the narrowing of the WTI-WCS differential.

US oil, gas producers

ExxonMobil Corp. reported second-quarter 2023 earnings of $7.9 billion, compared with first-quarter 2023 earnings of $11.4 billion and second-quarter 2022 earnings of $17.85 billion. Excluding the identified item associated with additional European taxes on the energy sector, earnings were $7.9 billion compared with $11.6 billion in the prior quarter.

Earnings were negatively influenced by decreased natural gas realizations and lower refining margins. However, results benefited from the absence of prior quarter unfavorable derivative mark-to-market impacts.

ExxonMobil’s upstream second-quarter earnings were $4.6 billion. Compared with the same quarter last year, upstream earnings decreased $6.8 billion, driven by lower crude and natural gas realizations. Production in Guyana and the US Permian basin grew by a combined 20% compared with the prior-year quarter. The increase was offset by impacts from divestments, the Sakhalin-1 expropriation, and government-mandated curtailments.

The company’s energy products segment had second-quarter earnings of $2.3 billion, down $1.9 billion from first-quarter 2023. Industry margins declined sequentially from a strong first quarter on weaker diesel margins as Russian supply concerns eased. Lower margins were partially offset by higher volumes from the first full quarter of the Beaumont, Tex., refinery expansion, lower scheduled maintenance, and continued reliability.

Chevron Corp. posted earnings of $6 billion for second-quarter 2023, compared with $11.6 billion in second-quarter 2022. Included in the current quarter was a one-time tax benefit of $225 million related to impairments that were recognized in prior periods. Foreign currency effects increased earnings by $10 million. Adjusted earnings of $5.8 billion in second-quarter 2023 compared with adjusted earnings of $11.4 billion in second-quarter 2022.

The decline in second-quarter 2023 earnings is attributed primarily to lower upstream realizations and reduced margins on refined product sales. Sales and other operating revenues during second-quarter 2023 amounted to $47.2 billion, a decrease from $65.4 billion in the same period last year.

Chevron had upstream earnings in second-quarter 2023 of $4.94 billion, down from $8.5 billion in second-quarter 2022 and $5.16 billion in first-quarter 2023. The company’s worldwide net oil-equivalent production was up 2% from the year-ago quarter, mainly driven by record Permian basin production of 772,000 boe/d.

Downstream earnings in second-quarter 2023 were $1.5 billion, down from $3.5 billion in second-quarter 2022 and $1.8 billion in first-quarter 2023. 

Capital expenditures in second-quarter 2023 rose by 18% from a year ago, primarily because of increased investments in the US.

ConocoPhillips had second-quarter 2023 earnings and adjusted earnings of $2.2 billion, compared with second-quarter 2022 earnings of $5.1 billion and adjusted earnings of $5.1 billion.

The decrease was primarily due to lower commodity prices, partially offset by increased volumes. Total average realized price was $54.50/boe, 38% lower than the $88.57/boe realized in second-quarter 2022.

For the quarter, the company generated cash provided by operating activities of $3.9 billion and cash from operations of $4.7 billion. The company funded $2.9 billion of capital expenditures and investments, paid $1.4 billion in ordinary dividends and variable return of cash (VROC), and repurchased $1.3 billion of shares.

Production for second-quarter 2023 was 1.8 MMboe/d, an increase of 113,000 boe/d from the same period a year ago. After adjusting for impacts from closed acquisitions and dispositions, second-quarter 2023 production increased 100,000 boe/d or 6% from the same period a year ago. Organic growth from Lower 48 and other development programs more than offset decline and downtime.

Lower 48 delivered record production of 1.06 MMboe/d, including 709,000 boe/d from the Permian basin, 235,000 boe/d from Eagle Ford shale, and 104,000 boe/d from Bakken shale.

Occidental Petroleum Corp. reported a second-quarter profit of $605 million, down from $3.5 billion in the same period of last year, on revenues of $6.7 billion versus nearly $10.7 billion. Operating profits fell to $1.1 billion from $1.6 billion due to lower realized oil prices and natural gas prices.

Occidental outpaced its second-quarter production forecasts by maintaining its pace of 1.22 MMboe/d from early in the year. As a result, executives have lifted the full year forecast to 1.21 MMboe/d, an increase of a little more than 1% from the prior outlook.

The company’s chemicals business produced a profit of $436 million versus $800 million in second-quarter 2022 while its midstream and marketing division lost $30 million compared with a profit of $264 million the year before.

Pioneer Natural Resources Co. reported second-quarter 2023 net income of $1.1 billion, down from $2.4 billion for second-quarter 2022. Cash flow from operating activities for the second quarter was $1.7 billion, down from $3.22 billion a year ago. Second-quarter oil production averaged 369,000 b/d, near the top end of quarterly guidance and up from 348,000 b/d in second-quarter 2022.

US independent refiners

Phillips 66 had second-quarter 2023 earnings of $1.7 billion compared with earnings of $2 billion in first-quarter 2023 and $3.2 billion in second-quarter 2022. Excluding special items of $69 million, the company had adjusted earnings of $1.8 billion in the second quarter, compared with first-quarter adjusted earnings of $2 billion.

The refining segment reported adjusted pre-tax income of $1.1 billion in second-quarter 2023, compared with pre-tax income of $1.6 billion in first-quarter 2023. Results in the second quarter include a $14 million loss related to an asset sale.

The decrease in earnings was due to a decline in margins, partially offset by higher volumes and lower operating expenses. Realized margins decreased to $15.32/bbl in the second quarter from $20.72/bbl in the first quarter, reflecting the decline in market crack spreads and lower feedstock advantage. The composite market crack spread, excluding RIN costs, decreased to $20.96/bbl in the second quarter from $22.39/bbl in the first quarter. Crude utilization rate was 93% and clean product yield was 86% during second-quarter 2023.

Valero Energy Corp. reported net income of $1.9 billion for second-quarter 2023, compared with $3.1 billion in this year’s first quarter and $4.7 billion in second-quarter 2022.

The refining segment had operating income of $2.4 billion for the quarter, compared with $4.1 billion for first-quarter 2023 and $6.2 billion for second-quarter 2022. The company’s refining margin fell to $4.2 billion in the quarter compared with $5.9 billion in this year’s first quarter and $8.1 billion in the prior year’s second quarter. Refining throughput volumes averaged 3 million b/d in this year’s second quarter, flat with second-quarter 2022.

The renewable diesel segment, which consists of the Diamond Green Diesel joint venture (DGD), had operating income of $440 million, compared with $152 million for second-quarter 2022. Segment sales volumes averaged 4.4 million gal/d (gpd) in the quarter, which was 2.2 million gpd higher than second-quarter 2022. The higher sales volumes were due to the impact of additional volumes from the startup of the DGD Port Arthur plant in fourth-quarter 2022.

The ethanol segment had operating income of $127 million for the quarter, compared with $101 million for second-quarter 2022. Ethanol production volumes averaged 4.4 million gpd in second-quarter 2023, which was 582,000 gpd higher than second-quarter 2022.

Marathon Petroleum Corp. reported net income of $2.2 billion for second-quarter 2023, compared with net income of $5.9 billion for second-quarter 2022. The 2023 second quarter adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) were $4.5 billion, compared with $9.1 billion for second-quarter 2022.

The company’s refining and marketing (R&M) margin was $22.10/bbl for second-quarter 2023, down from $37.54/bbl for second-quarter 2022. Crude capacity utilization was about 93%, driven by planned maintenance activity in the Mid-Continent and West Coast regions, resulting in total throughput of 2.9 million b/d for second-quarter 2023.

Canadian firms

All financial figures are presented in Canadian dollars unless noted otherwise.

Suncor’s net earnings were $1.88 billion in second-quarter 2023, compared with $4 billion in the prior year quarter. Adjusted operating earnings were $1.25 billion in second-quarter 2023, compared with $3.8 billion in the prior year quarter, primarily due to decreased crude oil and refined product realizations.

Refinery crude throughput was 394,400 b/d, and refinery utilization rate was 85% in second-quarter 2023, compared with 389,300 b/d and 84% in the prior year quarter, reflecting planned turnaround activities in both periods.

Cenovus Energy Inc. posted net income of $866 million for second-quarter 2023, compared with $636 million in the previous quarter and $2.43 billion in second-quarter 2022. The company’ financial results improved from the first quarter, primarily reflecting higher realized prices from the oil sands segment.

Cenovus Energy generated nearly $2 billion in cash from operating activities, about $1.9 billion in adjusted funds flow, and $897 million in free funds flow in second-quarter 2023. Total upstream production was about 730,000 boe/d, reflecting a planned turnaround at Foster Creek and production impacts in the conventional segment in May and June due to Alberta wildfires. Downstream throughput averaged almost 538,000 b/d, increasing in the quarter as volumes ramped up following restart work at the Superior and Toledo refineries.

Imperial reported estimated net income in the second quarter of $675 million, compared with net income of $1.25 billion in first-quarter 2023, reflecting lower refining margins and planned turnaround activity.

Upstream production in the second quarter averaged 363,000 boe/d. At Kearl, quarterly total gross production averaged 217,000 b/d (154,000 b/d Imperial’s share), primarily impacted by planned turnaround activity.

In the downstream segment, throughput in the quarter averaged 388,000 b/d with refinery capacity utilization of 90%, reflecting the impact of the planned turnaround at the Strathcona refinery. Petroleum product sales in the quarter were 475,000 b/d.