The combination of rising oil prices and recovering global demand has created the most favorable trading environment for oil companies. As a result, the surge in profitability of three major oil companies – Exxon Mobil (NYSE: XOM), chevron (NYSE: CLC) and Shell plc (New York Stock Exchange: SHEL) – in the second quarter, investor interest increased. Together, these companies made a whopping $46 billion profit in the quarter under review.
Of the companies mentioned above, Exxon has grown the most so far this year, 42.2%. While Chevron has jumped 31.3% since the start of the year, Shell is up 18.3%.
Now, let’s take a look at the second quarter results of these major oil companies to understand how they are riding the tailwinds of high energy prices and strong demand.
Exxon Mobil (NYSE:XOM)
Exxon Mobil recently posted the highest profit ever in a given quarter. The company reported earnings of $4.14 per share in the second quarter, quadrupling from $1.14 per share a year ago.
Company management attributed the strong performance to increased production, high energy prices, higher realizations, record fuel manufacturing margins and cost control initiatives. According to the company, natural gas realizations and refining margins are well above the 10-year range.
In the second quarter, Exxon increased its oil and gas production by about 4% year-on-year. The company aims to increase its refining capacity by nearly 250,000 barrels per day in the first quarter of 2023.
Given the company’s strong fundamentals, even Wall Street is bullish on XOM. On TipRanks, Exxon Mobil has a Strong Buy rating, which is based on 11 Buys and three Holds. Financial bloggers are also bullish on XOM.
Chevron (NYSE: CVX)
Recently, an integrated energy company Chevron reported better-than-expected second-quarter results due to high oil prices and resilient demand. The company’s adjusted earnings rose 240% year over year to $5.82 per share. Its revenue also jumped 83% from the year-ago period to $68.8 billion.
Chevron’s average selling price per barrel of crude oil and natural gas liquids was $89 in the June quarter, compared to $54 a year ago. The average natural gas selling price jumped to $6.22 per thousand cubic feet in the second quarter of 2022 from $2.16 a year ago.
In these favorable times, this cash-rich oil company has reduced its debt ratio to less than 15%. Additionally, Chevron has increased the high end of its stock buyback forecast from $10 billion to $15 billion. The company is also improving its supply capacity by expanding its traditional and new energy businesses.
However, Wall Street has mixed feelings about the stock. On TipRanks, Chevron has a moderate buy consensus rating, which is based on 10 buys, five holds, and one sell. Financial bloggers are 85% bullish on CVX. 
Shell (NYSE: SHEL)
multinational oil giant Shell recorded a profit of $3.06 per ADR in the second quarter of 2022, up 115.5% year-on-year. Revenue totaled $100.06 billion, up 65.3% from the prior year quarter, driven by healthy segment operations and record fuel manufacturing margins.
The company has also generously rewarded its shareholders. During the quarter, it paid cash dividends of approximately $1.9 billion (dividend yield is 3.59%) and repurchased shares worth $5.5 billion. Shell expects to complete its $6 billion share buyback program in the third quarter. The company also reduced its net debt level by $2.1 billion in the June quarter.
Wall Street seems impressed with Shell’s strong fundamentals. On TipRanks, Shell displays a Strong Buy consensus rating, based on three buys and one hold. On similar lines, financial bloggers are 97% bullish on SHEL. 
Final Thoughts
Increased demand due to the easing of COVID-19 restrictions, low supply levels, the ongoing Russian-Ukrainian conflict and slow new investment to build oil refining capacity should help maintain the strong momentum in this space.
Barring some moderation in fuel manufacturing margins, energy prices are expected to remain high in the near term. The U.S. Energy Information Administration (EIA) forecasts a 44.8% year-over-year increase in the average WTI crude oil price this year. The average price of natural gas is also expected to increase by 12.5% in 2022.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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