HOUSTON (Reuters) – Rising crude prices helped Chevron Corp (N:CVX) and Exxon Mobil Corp (N:XOM) easily beat Wall Street’s profit expectations on Friday, a sign the oil industry has regained its footing after a two-year price spiral.
While cost cuts and asset sales provided a boost to both companies, the results highlighted the slowly improving dynamics for the energy industry as oil prices (CLc1) (LCOc1) have climbed more than 50 percent since early 2016.
The results were especially strong at Exxon, where quarterly profit more than doubled to $4.01 billion.
Chevron swung to a quarterly profit and turned cash flow positive, earning more than it spent, a milestone Wall Street had long sought.
Shares of Exxon rose 1 percent and shares of Chevron were up 1.3 percent.
Their energy peers, BP Plc (L:BP) and Royal Dutch Shell Plc (L:RDSa), are set to report quarterly results next week.
Looming over the large international oil companies, though, is uncertainty over whether the Organization of the Petroleum Exporting Countries will extend a production cut when it meets next month in Vienna. Should the cut not be continued, oil prices would likely drop, pushing the sector back into recession.
Chevron and Exxon expanded production in their American shale portfolios during the quarter, with both deciding that the low-cost fields were an easy opportunity to boost profit.
Chevron, the second largest leaseholder in the Permian Basin, which is the largest American oilfield, has devoted much of its 2017 capital budget to shale projects. Chief Executive Officer John Watson told Reuters earlier this month the Permian was vital to Chevron’s growth.
Exxon doubled its acreage holdings in the Permian Basin of West Texas earlier this year in a deal worth up to $6.6 billion. It was the largest oil industry deal in the first quarter, highlighting how important it was for Exxon to grow in the oil-rich region.
In Asia, both companies expanded liquefied natural gas operations. Chevron brought a third processing facility online at its Gorgon LNG project in Australia, and Exxon bought InterOil in a $2.5 billion bid to expand in Papua New Guinea.
Exxon also bought a 25 percent stake in a Mozambique gas field last month in a deal worth up to $2.8 billion[:]