ExxonMobil and Chevron reported soaring profits on Friday despite lower oil and natural gas volumes as the petroleum companies return billions of dollars to shareholders after lofty crude prices and refining margins.
Both US oil companies scored huge profit increases propelled by crude prices that rose after the Russian invasion of Ukraine. But both companies have thus far avoided additional capital spending increases to fund drilling and development in spite of a tightening global energy outlook.
"We continue to invest prudently," said Kathy Mikells, chief financial officer of ExxonMobil, which increased spending on share buy-backs by $20 billion.
"We're going to stay disciplined on capital. We've given you a range, we've stuck within that range ever since we started putting it out there," said Mike Wirth, chief executive of Chevron, which raised its plans for share buy-backs to $10bn per year after previously targeting $5bn to $10bn per year.
Both oil companies are carrying out planned 2022 capital spending increases, but ruled out additional investment.
Part of the reticence to spend more to drill comes as the oil companies ramp up investment in hydrogen, carbon capture and storage and other low-carbon ventures amid pressure from environmental, social and governance (ESG) investors.
After a dreadful 2020 amid Covid-19 lockdowns that devastated petroleum demand, oil companies returned to profitability in 2021 and have continued to see earnings soar this year.
ExxonMobil's first-quarter profits more than doubled to $5.5bn, as a strong market for energy commodities more than offset $3.4bn in one-time costs connected to its withdrawal from the vast Sakhalin offshore oilfield following Russia's invasion of Ukraine.
Revenue rose 52.4 per cent to $87.7bn.
At Chevron, profits came in at $6.3bn, more than four times the year-ago level on a 70 per cent rise in revenue to $54.4bn.
Oil prices have generally lingered above $100 a barrel after spiking to around $130 a barrel in early March shortly after Russia's invasion of Ukraine.
There are few signs of immediate relief in the tight oil market, given rising demand as more economies ease Covid-19 restrictions, moves by some oil majors to cut petroleum investment in favour of low-carbon energy and other factors, Mr Wirth said.
"Inventories are quite low, demand is still strong and economies at this point seem to be handling it," Mr Wirth said on a conference call with analysts. "At some point, particularly if prices were to move higher, I do think it starts to be a bigger drag on the economy."
But the oil market remains cyclical and "the supply response is coming", he said.
Although both companies have announced plans to lift production later this decade, output dipped in the first quarter of 2022.
ExxonMobil's oil and gas output declined 3 per cent from the 2021 period, with the company pointing to severe cold weather that crimped output in Canada, as well as scheduled maintenance activity in Qatar and Guyana.
While Chevron touted a 10 per cent jump in US oil and gas production following an aggressive ramp-up in the Permian Basin in Texas, overall oil and natural gas volumes fell 2 per cent from last year's level.
Factors in Chevron's production decline included lower output in Thailand and the effect of lost output from a project in Indonesia where the contract expired.
Chevron chief financial officer Pierre Breber said the company's record in the Permian Basin shows its ability to grow output efficiently as he confirmed the company would not lift its capital budget beyond the current range of $15bn to $17bn in 2022.
"We can sustain and grow our traditional energy business at very reasonable rates," Mr Breber said. "We don't need to grow faster. We don't get paid for that. There's no time in our history where the market has valued growth."