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Exxon, Chevron see blowout earnings amid high energy prices

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Yahoo Finance Live anchors discuss earnings results from oil giants Exxon and Chevron after high energy prices led to record profits in the second quarter.

Video Transcript

BRIAN SOZZI: It's all giants. Exxon and Chevron have posted blowout numbers on the back of surging energy prices. Then you're seeing those stocks really pop higher on these results. Let's start with the Exxon, guys.

All right, I'm looking at a good flash note by the team over at Citi with the headline, "Refining blowout drives a new record in second quarter." And I think that just about sums it up. Good quarter from Exxon on the back of those higher energy prices, like we mentioned. Also, free cash flow at a record $16 billion. And the Street is looking for Exxon and even Chevron to start plowing this more and more into stock buybacks.

BRAD SMITH: Yeah, their Permian oil and gas production, approximately 130,000 oil equivalent barrels per day is what they're reporting right now, at least, or at least for this most recent quarter. Also they're going to continue to refine some of their throughput per day versus the first half of 2021 to really meet some of the demand that's out there in the market right now. And hopefully, that helps to drive some of the prices lower. If there is more demand that's able to be met, more capacity that Exxon is able to put out there. But--

JULIE HYMAN: But that doesn't seem to be what Exxon is saying. They're saying supplies are going to remain tight, so not necessarily good on that front. And to your point about them plowing the cash flow back into the company, they left their capital expenditure forecast unchanged for the full year at $21 billion to $24 billion. It's still above what analysts have been predicting, but it's not an increase, despite having this better than estimated quarter. I believe that cash flow number was a little below estimates for ExxonMobil. But again, the shares are up 1.2%.

What's interesting about these companies is, obviously, there is now sort of a political challenge, as they have been drawn into what's been going on with inflation, et cetera. They have been criticized by the administration and others for having these record profits, which have essentially been following prices higher. But nonetheless, it is a tricky situation for them to be in.

And Chevron not only had record quarterly profit also. It's returning that cash to shareholders and it boosted its buyback authorization by $5 billion after just a few months ago, raising its buyback before. So Chevron seeing a better reaction, perhaps, because of that cash return.

BRIAN SOZZI: The Chevron story has really turned around. I guess all it needed was some higher energy prices. Another quarter from them--

JULIE HYMAN: It helps. It doesn't hurt.

BRIAN SOZZI: Another quarter of them with good free cash flow, improving their stock buyback. And they're going to do what they're going to do. And now next up is Occidental, Warren Buffett favorite. How does that quarter look? Because if these quarters were this good, you have to think Occidental is going to put up some pretty well-- unless Warren Buffett-- you know, he's not buying more Occidental just for the sake of doing so.

BRAD SMITH: Well, it's amazing how much both of these companies also during a time where they're seeing some of those record quarters, they're still talking about, oh, yeah, we're leading the transition to net zero. Comes back-- exactly, right. And it comes back to what you were mentioning a moment ago with how politicized both of them have had to kind of position themselves as entities to say, hey, we're still trying to do the right thing. But at the same time, if the money is coming in, then who are we to turn it away right now?

JULIE HYMAN: Well, at some point, they are going to have to make that pivot. I mean, they are making that pivot slowly, but surely, the European majors are making that pivot. And it's not just because of politics. It's also because the reality is, that's where things are going eventually, even if it is more delayed, given what we are seeing because of the pandemic and then now because of inflation, et cetera.