Exxon Reaps Record Q1 Profits As Output Boost, Cost Cuts Offset Oil Price Slide

Exxon's near-record cash pile "not burning a hole in our pocket", said CEO Darren Woods.

Exxon Mobil  (XOM) - Get Free Report shares moved higher Friday after the U.S. oil major posted record first quarter profits, despite a pullback in crude prices, thanks in part to a ramp-up in production and ongoing cost cuts. 

New fields in Guyana, as well as increased production from the Permian Basin, helped Exxon add nearly 300,000 barrels of oil per day to its first quarter output, when compared to last year's levels. That helped drive a massive 34.8% increase in the group's adjusted profits for the three months ending in March, which came in at $2.79 per share, 20 cents ahead of Street forecasts, even as overall revenues fell 4.4% to $86.56 billion.

Oil and energy firms have been reaping record profits over the past year as the surge in crude prices that followed Russia invasion of Ukraine in February of 2021. WTI crude, the U.S. benchmark, traded as high as $99.30 in March of last year, but that spike also makes price comparisons, as well as overall profits, far more challenging heading into 2022.

Exxon's net income nearly doubled from last year, to $11.43 billion, a first quarter record, and the company said it remains on track to cut costs by around $9 billion, compared to 2023 levels, by the end of the year. 

Cost cuts helped rive Exxon's record 2022 profits, which totaled $59.1 billion prior to the payment of a $1.3 billion charge linked to the European Union's controversial windfall tax. In 2008, when oil traded at around $140 per barrel, Exxon's then-record profits were only $45.2 billion.

“Our people's hard work to execute on our strategic priorities delivered a record first quarter following a record year,” said CEO Darren Woods. “We are growing value by increasing production from our advantaged assets to meet global demand." 

"At the same time, our Low Carbon Solutions team is rapidly growing this new business with an additional carbon capture, transportation and storage agreement that underscores the company's growing momentum in providing industrial customers with large-scale emission reduction solutions,” Woods added.

Exxon shares were marked 1% higher in pre-market trading following the earnings release to indicate an opening bell price of $118.00 each, extending the stock's year-to-date gain to around 7%.

Exxon's cash pile was pegged at $32.7 billion at quarter-end, the company said, near to the all-time highs recorded in the wake of the global financial crisis, when crude prices topped $147 per barrel.

Earlier this month, the Wall Street Journal reported Exxon has held preliminary takeover talks with shale fracking specialists Pioneer Natural Resources  (PXD) - Get Free Report, which has a market value of around $50 billion. 

Woods told CNBC Friday that the cash "isn't burning a hole in our pocket", and that while the group is always looking for strategic transactions, a bigger cash position "doesn't change the value proposition" of any potential target.