(Bloomberg) — Exxon Mobil Corp. reported its highest gain since 2008, when Russia’s war in Ukraine turned global commodity markets upside down.
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Exxon’s announcement that first-quarter results may have reached nearly $11 billion bodes for booming profits across the oil industry as trade sanctions, shipping disruptions and rising demand strain supply lines.
The stroke of luck is not without risks, however. Key Democrats in the U.S. House of Representatives have called on Exxon and its rivals Chevron Corp., Shell Plc and BP Plc to immediately halt dividends and share buybacks until the end of the war, berating them for “profiting off the crisis in Ukraine.”
Political leaders are under pressure to ease sky-high energy prices and the specter of shortages. US President Joe Biden last week asked the industry to reinvest profits into new sources to help fill the supply gap from shunned Russian crude. At the same time, he warned against imposing fines on companies that are sluggish in developing federally-owned oil projects.
Lawmakers accused Exxon and the other three oil explorers of collectively spending $44 billion on buybacks and payouts last year and planning to spend another $32 billion in 2022, according to a letter read by the company’s chair House Oversight Committee, Carolyn B. Maloney, and the Environment Subcommittee were signed by Chair Ro Khanna.
Exxon “is charging outrageous gas prices and making record profits,” Senator Ed Markey, a Massachusetts Democrat, said in a Facebook post. “We should tax Big Oil’s windfall profits and give that money back to the working people of this country.”
Exxon said Monday that first-quarter results may have been as much as $2 billion higher than earnings for the last three months of 2021, when the company brought in $8.8 billion, according to a filing.
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Crude’s Rally
Rising oil prices were the main driver, with natural gas and higher refining margins also contributing. International crude oil futures hit a 14-year high of nearly $140 a barrel during the quarter.
Separately, Exxon officially approved Yellowtail’s $10 billion development off the coast of Guyana after receiving state and regulatory approvals. The project is the fourth and largest in an area known as the Stabroek Block and is expected to produce approximately 250,000 barrels per day beginning in 2025.
Exxon also announced that the exit from Sakhalin-1 oil production in Russia’s Far East could result in a write-down of up to $4 billion. The company recently pledged to leave Russia due to international sanctions and what the company’s CEO, Darren Woods, called “unnecessary destruction” of the nation in Ukraine.
Exxon shares were little changed at $82.99 as of 2:57 pm in New York.
(Updates with Senator Ed Markey’s comments in sixth paragraph.)
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