Fourth-quarter 2023 earnings down from year ago on lower commodity prices
A group of 51 US-based oil and gas producers and refiners reported a total net income of $33.54 billion in fourth-quarter 2023, compared with a combined net income of $57.1 billion for the same quarter a year ago. Total revenues were $324.4 billion for the quarter, compared with $369.98 billion a year ago. For full-year 2023, the group posted combined earnings of around $150 billion, down from $231 billion in 2022.
The year-over-year (y-o-y) decline in earnings is mainly due to lower commodity prices. Brent crude oil prices averaged $83.93/bbl in fourth-quarter 2023, compared with $88.44/bbl in fourth-quarter 2022. West Texas Intermediate (WTI) averaged $78.63/bbl in fourth-quarter 2023, compared with $82.69/bbl in the previous year's fourth quarter. Brent crude oil averaged $83/bbl in 2023, down from $101/bbl in 2022, a difference of $19/bbl after rounding.
Global markets underwent adjustments in response to new trade dynamics, notably with crude oil from Russia diversifying its destinations beyond the EU. Additionally, global crude oil demand fell short of expectations, countering the effects of OPEC+ crude oil supply reductions. In mid-December, oil prices began increasing again as geopolitical tensions rose amid multiple attacks on shipping vessels in the Red Sea.
For fourth-quarter 2023, US crude oil production averaged 13.28 million b/d, compared with 12.3 million b/d in the previous year's fourth quarter, according to US Energy Information Administration (EIA) data. US natural gas liquids (NGL) production averaged 6.7 million b/d during the quarter, up from 5.97 million b/d a year ago.
According to Baker Hughes, the count of active oil rigs in the US remained steady throughout fourth-quarter 2023, holding firm at 500 by December's close, a minor change from the 502 recorded at September's end. This compared with 621 rigs at the end of December 2022.
US commercial crude oil stock at the end of December 2023 was 426 million bbl, compared with 430 million bbl at the end of 2022 and a 5-year average of 440 million bbl.
US oil product stock at the end of December 2023 was 825 million bbl, compared with 792 million bbl at the end of fourth-quarter 2022 and a 5-year average of 824.8 million bbl.
The US Strategic Petroleum Reserve (SPR) at the end of the fourth quarter was 354 million bbl, compared with 372 million bbl at the end of fourth-quarter 2022 and a 5-year average of 574.2 million bbl.
US refiners’ earnings for fourth-quarter 2023 were weighed down by lower refining margins. According to Muse, Stancil & Co., refining cash margins in fourth-quarter 2023 averaged $20.64/bbl for Middle-West refiners, $18.38/bbl for West Coast refiners, $12.76/bbl for Gulf Coast refiners, and $9.58/bbl for East Coast refiners. In the same quarter of 2022, these refining margins were $42.52/bbl, $24.48/bbl, $29.86/bbl, and $26.95/bbl, respectively.
US refinery inputs were 16.47 million b/d in fourth-quarter 2023, compared with 16.35 million b/d for the same quarter a year ago and 17.02 million b/d for third-quarter 2023. The refinery utilization rate was 89.9% for the quarter, compared with 90.8% in the previous year's fourth quarter and 93.2% in third-quarter 2023.
On the natural gas side, Henry Hub natural gas spot prices averaged $2.74/MMbtu in fourth-quarter 2023, compared with $5.55/MMbtu a year earlier.
US dry gas production for the quarter increased to 105.57 bcfd from 101.575 bcfd a year earlier, according to EIA data. The number of active gas rigs in the US climbed to 120 at end-December from 116 at end- September. This compared with 156 rigs at end-December 2022.
Natural gas inventory ended the quarter at 3,457 bcf, compared with a 5-year average of 3,170 bcf. US LNG exports averaged 12.97 bcfd during the quarter, compared with 10.35 bcfd in fourth-quarter 2022.
A sample of 14 companies based in Canada, including oil and gas producers and pipeline operators, recorded collective earnings of $10.63 billion (Can.) in fourth-quarter 2023. In the fourth quarter of the prior year, this group’s combined earnings were $6.05 billion.
WTI/WCS (Western Canadian Select) spread narrowed to $21.90/bbl in fourth-quarter 2023 from $25.65/bbl in fourth-quarter 2022. The differential was $18.62/bbl in 2023, comparable to $18.26/bbl in 2022.
US oil and gas producers
ExxonMobil had fourth-quarter 2023 net income of $7.63 billion, compared with net incomes of $9.1 billion for third-quarter 2023 and $12.75 billion for fourth-quarter 2022. Fourth-quarter 2023 results included unfavorable identified items of $2.3 billion, including a $2 billion impairment as a result of regulatory obstacles in California that have prevented production and distribution assets from coming back online (OGJ Online, Jan. 5, 2024). Impairments were partly offset by favorable tax and divestment-related items.
The company's profit for full-year 2023 amounted to $36 billion, down from $55.7 billion in the year prior. Identified items for the year reduced earnings by $2.3 billion, compared with an unfavorable $2.9 billion impact in 2022. Excluding identified items, earnings decreased $15.8 billion on lower liquids and natural gas realizations, and unfavorable unsettled derivatives mark-to-market effects of $2.4 billion. Higher volume contributions from improved portfolio mix added nearly $1 billion.
Net production in fourth-quarter 2023 was 3.8 MMboe/d, an increase of 136,000 boe/d compared with the prior quarter on favorable entitlement effects and growth in the Permian basin and Guyana. Payara, the third Guyana development, started up in November ahead of schedule with production reaching nameplate capacity of 220,000 b/d in mid-January.
Chevron reported a fourth-quarter 2023 net profit of $2.26 billion, down from nearly $6.4 billion in fourth-quarter 2022. Adjusted earnings of $6.5 billion in fourth-quarter 2023 compared to adjusted earnings of $7.9 billion in fourth-quarter 2022. Operating revenues were nearly $49 billion versus $54.52 billion. The decline was due to lower average selling prices and higher depreciation and tax costs.
Chevron’s worldwide production was nearly 3.4 MMboe/d during fourth-quarter 2023 versus nearly 3.15 MMboe/d in third-quarter 2023, the first quarter with PDC Energy Inc. in the fold. Chevron acquired PDC in August 2023 for more than $7 billion to grow its footprint in the Permian basin and the Denver-Julesburg basin (OGJ Online, May 22, 2023).
ConocoPhillips’ fourth-quarter 2023 earnings of $3 billion were down from fourth-quarter 2022 earnings of $3.25 billion, but up from third-quarter 2023 earnings of $2.8 billion (OGJ Online, Nov. 2, 2023). Excluding special items, fourth-quarter 2023 adjusted earnings were $2.9 billion, compared with fourth-quarter 2022 adjusted earnings of $3.4 billion.
Full-year 2023 earnings were $11 billion, compared with full-year 2022 earnings of $18.7 billion. Excluding special items, full-year 2023 adjusted earnings were $10.6 billion, compared with full-year 2022 adjusted earnings of $17.3 billion.
The company’s production for fourth-quarter 2023 was 1.902 MMboe/d, an increase of 144,000 boe/d from the same period a year ago, and up from third-quarter 2023 production of 1.81 MMboe/d. After adjusting for impacts from closed acquisitions and dispositions, fourth-quarter 2023 production increased 75,000 boe/d, or 4%, from the same period a year ago. Full year 2023 production increased 88,000 boe/d from the same period a year ago. After adjusting for impacts from closed acquisitions and dispositions, production increased 73,000 boe/d, or 4%, from the same period a year ago.
Occidental had fourth-quarter 2023 net income of $1 billion, compared with $1.73 billion in the prior year’s fourth quarter. The company’s oil and gas pre-tax income for fourth-quarter 2023 was $1.6 billion, compared with pre-tax income of $2 billion for third-quarter 2023. Excluding items affecting comparability, fourth quarter oil and gas income declined from the prior quarter due to lower domestic crude oil and gas prices and higher lease operating expenses.
Occidental’s total average global production of 1.23 MMboe/d for the fourth quarter exceeded the midpoint of guidance by 8,000 boe/d, overcoming a third-party outage in the eastern Gulf of Mexico.
US independent refiners
Phillips 66 recorded fourth-quarter earnings of $1.3 billion, compared with earnings of $2.1 billion in the third quarter. Excluding special items of $102 million, the company had adjusted earnings of $1.4 billion in the fourth quarter, compared with third-quarter 2023 adjusted earnings of $2.1 billion.
Adjusted pre-tax income for refining was $797 million in the fourth quarter, compared with adjusted pre-tax income of $1.7 billion in the third quarter. The decrease was primarily due to lower realized margins, which decreased to $14.41/bbl in the fourth quarter from $18.96/bbl in the third quarter.
Refining pre-tax turnaround expense for fourth-quarter 2023 was $100 million, including $14 million related to the Rodeo renewables refinery. Crude utilization rate was 92% and clean product yield was 87%.
Marathon Petroleum Corp. (MPC) reported net income of $1.5 billion for fourth-quarter 2023, compared with net income of $3.3 billion for fourth-quarter 2022. The fourth-quarter 2023 adjusted EBITDA was $3.5 billion, compared with $5.8 billion for fourth-quarter 2022. The decrease in net income and adjusted EBITDA from a year ago was driven by lower refining margins.
For full-year 2023, MPC’s net income was $9.7 billion, compared with net income of $14.5 billion for full-year 2022. Adjusted net income was $9.7 billion for full-year 2023. This compares with adjusted net income of $13.5 billion for full-year 2022.
Adjusted EBITDA for the Refining & Marketing (R&M) segment was $2.2 billion in fourth-quarter 2023, versus $4.6 billion for fourth-quarter 2022, reflecting lower margins. R&M margin was $17.79/bbl for fourth-quarter 2023, versus $28.82/bbl for fourth-quarter 2022. Crude capacity utilization was roughly 91%, resulting in total throughput of 2.93 million b/d for fourth-quarter 2023, compared with total throughput of 2.89 million b/d for fourth-quarter 2022.
Valero Energy Corp. reported net income of $1.2 billion for fourth-quarter 2023, compared with $3.1 billion for fourth-quarter 2022. For 2023, net income was $8.8 billion, compared with $11.5 billion in 2022.
The refining segment reported operating income of $1.6 billion for fourth-quarter 2023, compared with $4.3 billion for fourth-quarter 2022. Refining throughput volumes averaged 3 million b/d in fourth-quarter 2023.
The renewable diesel segment, which consists of the Diamond Green Diesel joint venture (DGD), reported $84 million of operating income for fourth-quarter 2023, down from $261 million for fourth-quarter 2022. The decrease was due to lower renewable diesel margins in fourth-quarter 2023, which offset higher sales volumes in the quarter.
Canadian firms
All financial figures are presented in Canadian dollars unless noted otherwise.
Suncor Energy Inc.’s net earnings were $2.82 billion in fourth-quarter 2023, which included a $1.12 billion non-cash gain as a result of the acquisition of TotalEnergies EP Canada Ltd., compared with $2.74 billion in the prior year quarter.
Suncor's adjusted operating earnings were $1.63 billion in fourth-quarter 2023, compared with $2.43 billion in the prior year quarter. The decrease was primarily due to lower crude oil and refined product realizations, reflecting a weaker business environment in the current quarter, and decreased sales volumes in exploration and production. This was partially offset by lower income taxes, increased sales volumes in oil sands and increased refinery production.
Total oil sands bitumen production increased in fourth-quarter 2023 compared with the prior year quarter, primarily due to the company's increased working interest and strong bitumen production at Fort Hills, partially offset by decreased bitumen production at Oil Sands Base and Firebag, as a result of planned turnaround and maintenance activities.
Refinery crude throughput was 455,900 b/d and refinery utilization was 98% in the fourth quarter, compared with 440,000 b/d and 94% in the prior year quarter. Refined product sales were 575,500 b/d in fourth-quarter 2023, compared with 548,200 b/d in fourth-quarter 2022.
Canadian Natural Resources reported net earnings of about $2.63 billion for fourth-quarter 2023, up from $1.52 billion in the prior year quarter.
In fourth-quarter 2023, Canadian Natural achieved record quarterly average production volumes of 1.42 MMboe/d, an increase of 10% compared with the year ago level. The company achieved record quarterly average liquids production volumes in fourth-quarter 2023 of 1.05 million b/d, an increase of 11% over the fourth-quarter 2022 level. The oil sands mining and upgrading segment achieved record quarterly average production of 500,133 b/d in fourth-quarter 2023, an increase of 17% from the year-ago level.
The company also delivered record quarterly natural gas production volumes of 2.23 bcfd in fourth-quarter 2023, an increase of 5% compared with fourth-quarter 2022 levels.
Imperial Oil reported net income of $1.37 billion for fourth-quarter 2023, down from $1.73 billion from the prior year’s fourth quarter. Cash flow from operating activities was $1.31 billion.
The company’s upstream production reached 452,000 boe/d during fourth-quarter 2023, the highest level in over 30 years when adjusted for divestment of XTO Energy Canada. Following completion of the largest planned turnaround in Sarnia site history, Imperial Oil’s refinery capacity utilization was 94% during the quarter.
Conglin Xu | Managing Editor-Economics
Conglin Xu, Managing Editor-Economics, covers worldwide oil and gas market developments and macroeconomic factors, conducts analytical economic and financial research, generates estimates and forecasts, and compiles production and reserves statistics for Oil & Gas Journal. She joined OGJ in 2012 as Senior Economics Editor.
Xu holds a PhD in International Economics from the University of California at Santa Cruz. She was a Short-term Consultant at the World Bank and Summer Intern at the International Monetary Fund.
Laura Bell-Hammer | Statistics Editor
Laura Bell-Hammer has been the Statistics Editor for the Oil & Gas Journal since 1994. She was the Survey Editor for two years prior to her current position with OGJ. While working with OGJ, she also was a contributing editor for Oil & Gas Financial Journal. Before joining OGJ, she worked for Vintage Petroleum in Tulsa, gaining her oil and gas industry knowledge.
