Third-quarter 2023 earnings down annually on lower commodity prices

A group of 53 US-based oil and gas producers and refiners announced combined net earnings of $38 billion in third-quarter 2023, down from net earnings of $73.35 billion in third-quarter 2022, primarily attributed to the year-over-year decline in oil and gas prices. Total revenues were $342.51 billion for the quarter, compared with $430.95 billion in the prior year quarter.

Brent crude oil price averaged $86.70/bbl in third-quarter 2023, compared with $100.70/bbl in the previous year’s third quarter and $78/bbl in this year’s second quarter. West Texas Intermediate (WTI) price averaged $82.30/bbl in third-quarter 2023, compared with $93.10/bbl for the same quarter a year ago and $73.50/bbl in second-quarter 2023.

Crude oil prices, however, rose in the quarter from the second quarter as higher demand surpassed supply, a result of inventory reductions following OPEC+ production cuts, as well as the extension of voluntary oil supply cuts by Saudi Arabia and Russia until end-2023.

US crude oil production in third-quarter 2023 averaged 13.07 million b/d, compared with 12.05 million b/d a year earlier, according to data from the US Energy Information Administration (EIA). Natural gas liquids (NGLs) production averaged 6.51 million b/d during the quarter, compared with 6.13 million b/d in third-quarter 2022.

According to Baker Hughes, the number of active oil rigs in the US declined to 502 at end-September from 545 at end-June. This also compared with 604 rigs at the end of September 2022. 

US commercial crude oil stock at end-September was 417 million bbl, compared with 429 million bbl at the same time a year earlier and a 5-year average of 439 million bbl.

US oil product stock at the end of September was 856 million bbl, compared to 786 million bbl at the end of the same quarter a year ago and a 5-year average of 857 million bbl.

US Strategic Petroleum Reserve (SPR) at the end of September was 351 million bbl, compared with 416 million bbl at end-September 2022 and a 5-year average of 593 million bbl.

US refinery inputs were 16.95 million b/d in third-quarter 2023, compared with 16.82 million b/d a year earlier and 16.75 million b/d in second-quarter 2023. Refinery utilization rate was 92.7% for third-quarter 2023 compared with 93.6% a year earlier and 91.7% in second-quarter 2023. 

According to Muse, Stancil & Co., refining cash margins in third-quarter 2023 averaged $24.70/bbl for Mid-West refiners, $37/bbl for West Coast refiners, $26.80/bbl for Gulf Coast refiners, and $20.60/bbl for East Coast refiners. In the same quarter of 2022, these refining margins were $39/bbl, $32/bbl, $27.30/bbl, and $18.90/bbl, respectively.

Henry Hub natural gas spot prices averaged $2.59/MMbtu in third-quarter 2023, compared with $7.99/MMbtu a year earlier, while US dry gas production for the quarter grew to 104.15 bcfd from 101.21 bcfd a year earlier, according to EIA data.

Natural gas inventory ended the quarter at 3,492 bcf, compared with a 5-year average of 3,423 bcf. US LNG exports averaged 11.42 bcfd during the quarter, up from 9.74 bcfd in the previous quarter.

The number of active gas rigs in the US decreased to 116 at end-September 2023 from 124 at end-June 2023. There were 159 active gas rigs to end September 2022. 

A sample of 14 oil and gas producers and pipeline companies with headquarters in Canada reported collective net earnings of $7.45 billion (Canadian dollar) in third-quarter 2023, compared with net earnings of $10.2 billion in the prior year’s quarter. 

Western Canadian Select at Hardisty (WCS) averaged $69.30/bbl in third-quarter 2023, compared with $72/bbl in the prior year quarter and $58.74/bbl in second-quarter 2023. WTI/WCS spread decreased to $12.90/bbl in third-quarter 2023 from $15/bbl in second-quarter 2023 and $19.90/bbl in third-quarter 2022. 

US firms

ExxonMobil Corp. had third-quarter 2023 earnings of $9.1 billion, compared with second-quarter 2023 earnings of $7.9 billion and $19.66 billion in third-quarter 2022. 

Third-quarter results improved from the previous quarter due to strong operating performance, including record third-quarter refining throughput as well as a higher crude price and refining margin environment. These factors were partly offset by weaker chemical margins and unfavorable derivative mark-to-market impacts.

Cash flow from operations was $16 billion, up $6.6 billion versus second-quarter 2023. In line with plans, capital and exploration expenditures were $6 billion in this year’s third quarter, bringing year-to-date 2023 expenditures to $18.6 billion. Full-year capital and exploration expenditures are expected to be at the top end of guidance of $23-25 billion.

Upstream third-quarter earnings were $6.1 billion, an increase of $1.5 billion from this year’s second quarter, driven by higher crude prices, lower scheduled maintenance, and favorable tax impacts. Compared with the same quarter last year, earnings decreased by $6.3 billion (OGJ Online, Oct. 28, 2022). Excluding impacts from divestments, entitlements, and government-mandated curtailments, net production grew about 80,000 boe/d, mainly driven by the Permian basin and Guyana.

Energy Products’ third-quarter earnings were $2.4 billion, up $100 million sequentially due to improved industry refining margins and record throughput. 

Chemical Products’ third-quarter earnings were $249 million, down from $828 million in this year’s second quarter. Industry margins compressed from higher feedstock costs and lower price realizations as industry supply outpaced demand. 

Meantime, the Baytown chemical expansion project started up in the third quarter, adding 750,000 tons/year of performance chemicals production capacity (OGJ Online, Oct. 2, 2023).

Chevron Corp. earned $6.5 billion for third-quarter 2023, down from $11.2 billion in the same period last year, primarily due to lower upstream realizations and lower margins on international refined product sales. 

Adjusted earnings of $5.7 billion in third-quarter 2023 compared with adjusted earnings of $10.8 billion in third-quarter 2022. Sales and other operating revenues in third-quarter 2023 were $51.9 billion, down from $63.5 billion in the year-ago period.

Chevron’s upstream earnings were $5.7 billion for third-quarter 2023, down from $9.3 billion recorded in the previous year’s third quarter, reflecting lower commodity prices. The company’s worldwide net oil-equivalent production was up 4% from the year-ago quarter primarily due to the acquisition of PDC Energy.

US net oil-equivalent production was up 20% from third-quarter 2022 and set a new quarterly record, primarily due to the acquisition of PDC Energy, which added 179,000 boe/d during the quarter, and net production increases in the Permian basin. US upstream earnings were lower than a year ago, primarily on lower realizations partially offset by earnings associated with PDC Energy.

International net oil-equivalent production was down 112,000 b/d from a year earlier primarily due to higher impacts from turnarounds, shutdowns, and normal field declines. International upstream earnings were lower than a year ago primarily due to lower realizations and lower sales volumes, partially offset by a favorable one-time tax benefit of $560 million in Nigeria and foreign currency effects.

The downstream segment reported a profit of $1.68 billion, a decrease from the $2.53 billion recorded a year ago. This decline was primarily attributed to significantly lower performance in international markets.

ConocoPhillips had third-quarter 2023 earnings of $2.8 billion, a decrease from $4.5 billion in third-quarter 2022. Excluding special items, third-quarter 2023 adjusted earnings were $2.6 billion, compared with third-quarter 2022 adjusted earnings of $4.6 billion. Special items in the current quarter mainly consisted of a tax reserve reversal benefit and a gain associated with the divestiture of a Lower 48 equity investment. 

The decline in earnings and adjusted earnings from third-quarter 2022 was primarily attributed to lower commodity prices. The company’s total average realized price was $60.05/boe, 28% lower than the $83.07/boe realized in third-quarter 2022.

Production for the quarter was 1.81 MMboe/d, an increase of 52,000 boe/d from the same period a year ago. After adjusting for impacts from closed acquisitions and dispositions, third-quarter 2023 production increased 49,000 boe/d or 3% from the same period a year ago. Organic growth from Lower 48 and other development programs more than offset decline and downtime.

During the quarter, ConocoPhillips further diversified its LNG portfolio by signing a 15-year throughput agreement for about 1.5 million tpy of regasification at the Gate LNG Terminal in the Netherlands.

Devon Energy Corp. reported a third-quarter net profit of $910 million, down from $1.9 billion in the same quarter in 2022. In the 3 months ended Sept. 30, Devon’s realized price was $46.92/boe versus $58.48/boe in the prior-year quarter.

Devon’s total oil production during the quarter was 321,000 b/d. That is expected to slip to about 315,000 b/d in this year’s fourth quarter in part because of declines from Williston basin wells. 

Third-quarter net income at Chesapeake Energy Corp. totaled $70 million, down from $883 million in the year-ago quarter when the company netted more than $1.2 billion from derivative settlements. Adjusted net income was $155 million versus $730 million as natural gas, oil, and NGL revenues fell to $682 million from nearly $3 billion. 

Hess Corp.’s net income was $504 million in third-quarter 2023, down slightly from net income of $515 million in the same quarter in 2022. Oil and gas net production was 395,000 boe/d, up 13% from 351,000 boe/d, proforma for asset sold, in third-quarter 2022. Hess, which entered a deal to be acquired by Chevron for $53 billion, said increased production was primarily due to higher production in the Bakken, Guyana, and Southeast Asia.

For third-quarter 2023, Comstock Resources Inc. had adjusted net income of $11.7 million compared with $326 million for the same quarter in 2022. Continued weak natural gas prices weighed heavily on the quarterly results.

US independent refiners

Phillips 66 had earnings of $2.1 billion for third-quarter 2023 compared with earnings of $1.7 billion in the second quarter. 

In third-quarter 2023, Phillips 66’s refining segment reported pre-tax income of $1.7 billion, compared with pre-tax income of $1.1 billion in second-quarter 2023. The increase was primarily due to higher realized margins and strong utilization. Realized margins increased to $18.96/bbl in the third quarter from $15.32/bbl in the second quarter, driven by higher market crack spreads, partially offset by inventory hedge impacts, lower secondary product margins, and lower Gulf Coast clean product realizations. Crude utilization rate for the third quarter was 95% and clean product yield was 85%.

The chemicals segment reflects Phillips 66’s equity investment in Chevron Phillips Chemical Co. LLC (CPChem). Third-quarter 2023 adjusted pre-tax income for the segment was $104 million, compared with $192 million in second-quarter 2023. This decrease was mainly due to lower margins, partially offset by higher volumes. 

Marathon Petroleum Corp. reported net income of $3.3 billion for third-quarter 2023, compared with net income of $4.5 billion for third-quarter 2022. Adjusted net income was $3.2 billion for third-quarter 2023, compared with adjusted net income of $3.9 billion for third-quarter 2022. 

The Refining & Marketing (R&M) segment had adjusted EBITDA of $4.4 billion in third-quarter 2023 versus $5.5 billion for third-quarter 2022. Adjusted EBITDA was $16.06/bbl for third-quarter 2023 versus $19.87/bbl for third-quarter 2022. The decrease was driven by lower market crack spreads. R&M margin was $26.16/bbl for third-quarter 2023 versus $30.21/bbl for third-quarter 2022. Crude capacity utilization was about 94%, resulting in total throughput of 3 million b/d for third-quarter 2023.

HF Sinclair Corp. reported third-quarter 2023 net income of $791 million, down from $954 million during the same quarter in 2022, amid lower refining margins and product sales resulting from increased scheduled plant maintenance during the period.

Canadian firms

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

Suncor’s net earnings were $1.54 billion in third-quarter 2023, compared with a net loss of $609 million in the prior year quarter. Suncor’s adjusted operating earnings were $1.98 billion in third-quarter 2023, compared with $2.56 billion in the prior year quarter, primarily due to decreased crude oil price realizations, asset divestments, partially offset by increased refining and marketing gross margins, increased sales volumes in oil sands, and lower income taxes.

Suncor’s total oil sands bitumen production increased in third-quarter 2023 compared with the prior year quarter, primarily due to the impact of significant planned turnaround activities at Syncrude in the prior year quarter and continued strong performance from the company’s in situ assets, partially offset by decreased bitumen production at Oil Sands Base and at Fort Hills. Exploration and production during the quarter decreased compared with the prior year quarter, primarily due to international asset divestments.

Refinery crude throughput was 463,200 b/d and refinery utilization was 99% in third-quarter 2023, compared with 466,600 b/d and 100% in the prior year quarter.

Refined product sales of 574,100 b/d in third-quarter 2023 were comparable to 577,300 b/d in the prior year quarter.

Imperial Oil reported estimated net income for third-quarter 2023 of $1.6 billion, up from net income of $675 million in second-quarter 2023, driven by strong operating performance and higher commodity prices. Quarterly cash flow from operating activities was $2.36 billion, up from $885 million in second-quarter 2023.

Imperial Oil’s upstream production in third-quarter 2023 averaged 423,000 boe/d. At Kearl, quarterly total gross production averaged 295,000 b/d (Imperial’s share 70.8%), the highest quarterly production in the asset’s history. 

In the downstream, throughput in the quarter averaged 416,000 b/d with refinery capacity utilization of 96%. Petroleum product sales in the quarter were 478,000 b/d.

Cenovus Energy Inc.’s net earnings in third-quarter 2023 were $1.9 billion, compared with $866 million in the previous quarter and $1.6 billion in third-quarter 2022. The increase in net earnings was primarily due to higher operating margin and lower financing costs. 

Cenovus Energy’s total upstream production was 797,000 boe/d in third-quarter 2023, an increase of 9% from the second quarter as the company restarted production that had been offline due to Alberta wildfires and planned maintenance activity. Upstream operating margin was about $3.4 billion, an increase from $2.3 billion in the previous quarter, primarily driven by higher Brent and WTI crude oil prices, a tighter light-heavy differential, as well as higher production and sales volumes. 

Downstream operating margin was $922 million, compared with $143 million in second-quarter 2023, primarily due to higher refined product volumes as the Toledo refinery achieved 90% utilization in the quarter, and an increase in refined product pricing.