Chevron beats expectations as ExxonMobil disappoints

For the biggest US oil explorers, the first quarter was a study in contrasts:

Chevron beat every analyst estimate, while larger rival ExxonMobil fell short on both production and profit. The performances underscore the challenges facing the two descendants of John D. Rockefeller's sprawling 19th century empire.

For Chevron, it's about rewarding long-suffering investors who had funded costly natural gas projects in Australia for more than a decade. For Exxon, chief executive Darren Woods is tasked with rebuilding an asset base that analysts say didn't receive enough investment over the past 10 years.

Chevron took full advantage of crude’s rally during the period with earnings and output potentially raising the chance of share buybacks later this year, though none were announced on Friday.

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Exxon, meanwhile, posted its worst first-quarter production figure since the Mobil merger in 1999.

"It's striking that, in the context of $70 oil where production is rebounding for almost everyone, Exxon has been down seven of the last eight quarters," said Pavel Molchanov, am analyst at Raymond James Financial.

“Investors are rewarding Chevron, given their preference for immediate payback after the 2014-16 oil price crushed returns. Meanwhile, Exxon is a long-term bet, with Mr Woods anticipating capital expenditure swelling to more than $30 billion a year well into the next decade.”

Chevron was very, very strong on really good upstream, said Jason Gammel, a analyst at Jefferies LLC. "Exxon was a bit disappointing." The result: Exxon tumbled as much as 5.4 per cent in New York, wiping out two weeks of gains. Chevron climbed 1.3 per cent.

Woods has said it’s wise to invest now when others are reining in spending and returning cash to shareholders. Exxon pumped the equivalent of 3.889 million barrels a day in the quarter, the first sub-four million figure for that time of year in almost two decades. The number was also lower than all seven estimates from analysts in a Bloomberg survey. The company’s first-quarter profit of $1.09 a share was also below analyst estimates.

Chevron, in comparison, earned $1.90 a share during the first three months of the year, well in excess of the $1.47 average of 18 estimates. The company also pumped more crude and natural gas than observers anticipated. – Bloomberg