ExxonMobil and Chevron profits fall as oil prices fall

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Profits at ExxonMobil and Chevron fell as lower commodity prices and lower refining margins outweighed U.S. oil groups’ output gains, reflecting a blow to their European rivals.

Exxon, the West’s largest oil company, reported net income of $8.6 billion on Friday, down 7 percent from the same period a year ago. Chevron, the second-largest company, earned $4.5 billion, down 30 percent from last year.

After impressive results in 2022 and 2023, the fortunes of US oil companies have waned this year as oil and gas prices and lower profits turn crude oil into gasoline and other products.

“The biggest factor that we would see year over year is simply the price profitability of the industry. . . particularly in terms of both gas prices and refining margins, which are near all-time highs,” Kathy Mikells, Exxon’s chief financial officer, told the Financial Times.

The US duo’s results mirrored those of their European counterparts, who reported profits earlier in the week.

BP has achieved its goal lowest quarterly profit following the Covid-19 pandemic, while France’s TotalEnergies reported profits at a three-year low. Shell’s results were softened by its booming liquefied natural gas business.

Industry profits surged to record levels in 2022 as Russia’s full-scale invasion of Ukraine sent oil and gas prices soaring and boosting refining margins. They declined in 2023 but remained elevated.

Oil prices have fallen this year due to weak demand and sluggish economic growth, especially in China, one of the world’s biggest consumers. Elsewhere, U.S. natural gas prices have fallen to historic lows amid ongoing supply gluts.

Despite comparatively weak profits, Exxon and Chevron’s earnings beat Wall Street expectations as the companies cut costs and increased production, especially in the Permian Basin of Texas and New Mexico, the largest U.S. oil fields.

That helped boost U.S. oil production to a record 13.4 million barrels per day in August, according to data released this week by the U.S. Energy Information Administration.

Exxon also continued to ramp up production at its profitable field off the coast of Guyana. He remains at loggerheads with Chevron, which sought to buy participation in the enterprise by acquiring Hess for $53 billion.

Exxon claimed it had first right of refusal over Hess’ share of the project and initiated arbitration proceedings. The case will be heard next year.

Both companies continued to return money to investors through dividends and share buybacks. Chevron returned a record $7.7 billion to shareholders in the quarter, while Exxon returned $9.8 billion and announced a dividend increase to continue a 42-year streak of hikes.

The industry’s ability to continue delivering returns to shareholders in a weaker price environment has come under scrutiny. BP said on Tuesday it would “review” its plans for a 2025 share buyback in February.