Second-quarter 2024 earnings down from year ago on lower refining margins, gas prices

A group of 53 US-based oil and gas producers and refiners reported combined net earnings of $26.96 billion in second-quarter 2024, down from earnings of $31.79 billion in the previous year's second quarter. Year-to-date earnings were $66.2 billion versus $143.3 billion in first-half 2023. Earnings decreased as industry refining margins and natural gas prices fell from last year's historically high levels to trade within the 10-year historical range, while crude prices experienced a modest rise.

Brent crude oil prices averaged $84.65/bbl in second-quarter 2024, compared with $78.32/bbl a year earlier and $83/bbl in first-quarter 2024. West Texas Intermediate (WTI) averaged $81.80/bbl in second-quarter 2024, compared with $73.76/bbl in second-quarter 2023 and $77.56/bbl in first-quarter 2024.

US crude oil production in second-quarter 2024 averaged 13.2 million b/d, compared with 12.76 million b/d for the same quarter a year ago, according to the US Energy Information Administration (EIA). Natural gas liquids production averaged 6.81 million b/d during the quarter, compared with 6.42 million b/d a year earlier. 

US commercial crude oil stock at the end of the second quarter was 445 million bbl, compared with 454 million bbl at the end of the previous year's second quarter and a 5-year average of 462.8 million bbl. Strategic Petroleum Reserve (SPR) at the end of June was 373 million bbl, compared with 347 million bbl at the end of second-quarter 2023 and a 5-year average of 552.2 million bbl.

US oil product stock at end June was 824 million bbl, compared with 809 million bbl at end June 2023 and a 5-year average of 833.8 million bbl.

US refinery inputs were 16.93 million b/d in second-quarter 2024, compared with 16.75 million b/d a year earlier and 15.78 million b/d for the previous quarter. Refinery utilization rate was 92.4% for the quarter, up from 91.7% in the previous year's second quarter and 85.8% in first-quarter 2024. 

According to Muse, Stancil & Co., refining cash margins in second-quarter 2024 averaged $16.63/bbl for Middle-West refiners, $17.73/bbl for West Coast refiners, $13.13/bbl for Gulf Coast refiners, and $9.99/bbl for East Coast refiners. In the same quarter of 2023, these refining margins were $25.38/bbl, $21.12/bbl, $21.77/bbl, and $14.44/bbl, respectively.

Natural gas spot prices at Henry Hub averaged $2.09/MMbtu in second-quarter 2024, compared with $2.16/MMbtu in second-quarter 2023.

US marketed gas production decreased to 111.65 bcfd from 112.5 bcfd for the same quarter a year ago, according to EIA data. US LNG exports averaged 11.36 bcfd during the quarter, a decrease of 3.5% from the previous year's fourth quarter. Natural gas inventory ended the quarter at 3,179 bcf, compared with a 5-year average of 2,680 bcf.

A sample of 13 companies based in Canada, including oil and gas producers and pipeline operators, recorded total earnings of $8.59 billion (Can.) in second-quarter 2024. In the second quarter of the prior year, this group’s combined income was $7.7 billion.

WTI/WCS (Western Canadian Select) spread narrowed to $13.54/bbl in second-quarter 2024 from $15.07/bbl in second-quarter 2023 and $19.34/bbl in first-quarter 2024. 

US oil and gas producers

ExxonMobil reported a second-quarter 2024 net income of $9.2 billion, an increase of $1.4 billion from first-quarter 2024 driven by the Pioneer Natural Resources Corp. acquisition, record Guyana and heritage Permian basin production, and structural cost savings.

Moreover, higher crude realizations and divestment gains more than offset lower gas realizations. 

Net production in the second quarter was 4.4 MMboe/d, an increase of 15%, or 574,000 boe/d compared with the previous quarter, due to strong volume growth from Pioneer, Guyana, and heritage Permian.

ExxonMobil’s year-to-date earnings were $17.5 billion versus $19.3 billion in first-half 2023. Earnings decreased as industry refining margins and natural gas prices declined from last year's historically high levels. 

Chevron Corp. reported its second-quarter 2024 earnings with a net income of $4.4 billion, a decrease from $6.0 billion reported in the same quarter of 2023. The adjusted earnings for the quarter were $4.7 billion, down from $5.8 billion a year earlier. The reduction in earnings was influenced by lower margins on refined product sales, the absence of prior year favorable tax items, and unfavorable foreign currency effects​.

Worldwide net oil-equivalent production was up 11% from a year ago primarily due to the PDC Energy Inc. acquisition and strong performance in the Permian and Denver-Julesburg (DJ) basins in the US, partly offset by downtime in Australia.

ConocoPhillips reported second-quarter 2024 earnings and adjusted earnings of $2.3 billion, compared with second-quarter 2023 earnings and adjusted earnings of $2.2 billion. The quarter benefited from higher average realized prices, despite weaker Lower 48 gas realizations, and higher volumes. These increases were partially offset by higher depreciation, depletion and amortization and higher operating costs.

Production for second-quarter 2024 was 1.94 MMboe/d, an increase of 140,000 boe/d from the same period a year ago. After adjusting for closed acquisitions and dispositions, second-quarter 2024 production increased 4% from the same period a year ago.

ConocoPhillips’ 6-month 2024 earnings were $4.9 billion, compared with 6-month 2023 earnings of $5.2 billion.

Occidental announced net income for second-quarter 2024 of $992 million, compared with $605 million in the prior year’s second quarter. Total average global production of 1.26 MMboe/d for second-quarter 2024 exceeded the midpoint of guidance by 6,000 boe/d, led by Permian basin and Gulf of Mexico. OxyChem earned pre-tax income of $296 million for second-quarter 2024, higher than the first quarter income.

EOG Resources reported 2024 second-quarter earnings of $1.69 billion, up from $1.55 billion in the prior year’s second quarter. The company’s total oil production for the second quarter was 490,700 b/d, above the midpoint of the guidance and up 1% from the first quarter. Natural gas production was above the midpoint of the guidance and up 1% from the first quarter. The company updated full-year guidance to reflect higher volumes and lower per-unit cash operating costs.

US independent refiners

Phillips 66 had second-quarter earnings of $1 billion, compared with earnings of $1.7 billion in 2023’s second quarter.

The company reported refining operations with 98% crude utilization and 86% clean product yield. Earnings for refining was $302 million in the second quarter, compared with earnings of $1.2 billion in second-quarter 2023. Year-to-date refining earnings were $518 million, down sharply from $2.77 billion for first-half 2023, due to much lower refining margins.

Marathon Petroleum Corp. (MPC) reported net income attributable to MPC of $1.5 billion for second-quarter 2024, compared with net income of $2.2 billion for second-quarter 2023. Adjusted net income was $1.4 billion for second-quarter 2024.

Adjusted EBITDA for the Refining & Marketing (R&M) segment was $2 billion in second-quarter 2024, versus $3.2 billion for second-quarter 2023. The decrease in segment adjusted EBITDA was driven primarily by lower market crack spreads.

R&M margin was $17.37/bbl for second-quarter 2024, versus $22.10/bbl for second-quarter 2023. Crude capacity utilization was about 97%, resulting in total throughput of 3.1 million b/d. Refining operating costs per barrel were $4.97 for second-quarter 2024, versus $5.15 for second-quarter 2023.

Valero Energy reported net income attributable to Valero stockholders of $880 million for second-quarter 2024, compared with $1.9 billion for second-quarter 2023. The refining segment reported operating income of $1.2 billion for second-quarter 2024, compared with $2.4 billion a year ago. Refining throughput volumes averaged 3.0 million b/d in this year’s second quarter.

Canadian firms

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

Suncor’s net earnings were $1.568 billion in second-quarter 2024, compared with $1.879 billion in the prior year quarter. Adjusted operating earnings increased to $1.63 billion in second-quarter 2024, compared with $1.25 billion in the prior year quarter, primarily due to higher realized crude oil prices and increased Oil Sands sales volumes, as well as higher refinery production in Refining and Marketing (R&M), partially offset by higher royalties, lower Exploration and production (E&P) volumes and lower refined product realizations. 

Total oil sands bitumen production increased to 834,400 b/d in this year’s second quarter, compared with 814,300 b/d in the prior year quarter, primarily due to the company’s increased working interest in Fort Hills, in addition to record second quarter gross bitumen production at Fort Hills, and record quarterly production at Firebag, partially offset by lower production at Oil Sands Base as a result of planned turnaround and maintenance activities.

E&P production during the second quarter decreased compared to the prior year quarter, primarily due to the divestment of the company’s UK portfolio, the absence of production from White Rose and lower production from Hebron, partially offset by the addition of production from Terra Nova.

Refinery crude throughput increased to 430,500 b/d and refinery utilization was 92% in second-quarter 2024, compared with 394,400 b/d and 85% in the prior year quarter, reflecting strong utilizations at all refineries outside of planned turnaround activities in the current quarter.

Canadian Natural Resources reported net earnings of about $1.7 billion for second-quarter 2024, up from $1.5 billion in the prior year quarter.

Canadian Natural delivered volumes of about 934,000 b/d of liquids and 2.1 bcfd of natural gas, totaling 1.29 MMboe/d, an increase of 8% from second-quarter 2023 levels of 1.2 MMboe/d.