Exxon signals caution on oil prices even as profits surge

(FILES) This file photo taken on December 30, 2014 shows an Exxon gas station in Falls Church, Virginia. Oil giant ExxonMobil said May 5, 2016 it was starting a new venture that could make carbon-dioxide capture a more economically attractive way to fight global warming. ExxonMobil said its new agreement with FuelCell Energy aims to develop technology for capturing carbon-dioxide emissions from power plants using fuel cells. / AFP PHOTO / SAUL LOEBSAUL LOEB/AFP/Getty Images

Exxon Mobil Corp.’s profit more than doubled in the first quarter, and it managed to pay for its dividend and capital expenditures with its cash flow.

But the Irving, Texas-based oil company said it’s still cautious about future oil prices because of the rapid increase in U.S. shale oil production. Exxon, for example, has already brought its domestic rig count up from 13 to 18 since the fourth quarter.

“The macro would indicate the need to be cautious going forward,” Exxon spokesman Jeff Woodbury told investors. “As we would have expected, we’re seeing a supply side response to supply and demand coming into balance.”

Oil production outside of OPEC, especially in North America, has taken off, and U.S. shale producers have been able to put out between 800,000 to 1 million barrels a day in a 12-month period, Woodbury said, emphasizing “the importance of making sure we’re very thoughtful about the nearer and longer-term market environment.”

While oil demand is expected to grow at 1.4 million barrels a day this year, oil storage tanks still have some 600 million barrels to work off as oil production and demand realign, he said.

In January, the company agreed to pay $6.6 billion for private companies with some 275,000 net acres in the Delaware Basin in New Mexico and West Texas. Woodbury said Exxon plans to deploy at least one rig there soon, though it’s unclear whether its planned 15-rig drilling program will be up and running by the end of this year or in 2018.

The number of active drilling rigs in the United States has more than doubled since May. Oil prices have dropped below $50 a barrel this week, as traders look to surging output in the United States.

In the first quarter, Exxon’s oil-production business swung back from a loss amid rising crude prices, the company said Friday.

All told, the oil company made $4 billion, or 95 cents a share, in the first quarter, compared to $1.8 billion, or 43 cents a share, in the same three-month period last year. Its revenue climbed to $63.3 billion to $48.7 billion.

It spent about $4.2 billion in capital expenditures, down from $5.1 billion the same time last year. Its shareholder dividends cost $3.1 billion. Exxon pumped 4.2 million barrels of oil equivalent a day, down 4 percent from a year ago.

Exxon’s oil-production business collected $2.3 billion, swinging up from a $76 million loss last year. Its U.S. output still lost $18 million, but its losses last year dwarfed that figure at $832 million. In the refining business, it made $1.1 billion, up by $210 million.

Exxon Chairman and CEO Darren Woods credited higher oil prices and the company’s cost-cutting.

In addition to the Permian Basin deal, Exxon also closed its purchase of InterOil Corp. in Canada and bought a 25 percent stake in a natural gas block off the coast of Mozambique for $2.8 billion.