ExxonMobil and Chevron made less money this year because commodity prices dropped. However, their profits were still high enough to increase shareholder payouts.
In the wake of Russia’s past invasion of Ukraine, which sent crude and natural gas prices soaring, two major US oil companies have witnessed significant declines in their financial results. Joining European counterparts Shell and Total in the downturn, ExxonMobil and Chevron have reported lower profits and revenues compared to the heady figures of the previous year.
ExxonMobil’s profits reached $7.9 billion, down by 56 percent, accompanied by a 28 percent drop in revenues to $82.9 billion. Similarly, Chevron reported profits of $6.0 billion, reflecting a 48 percent decline, with revenues also falling 28 percent to $48.9 billion.
The second quarter of 2023 saw US crude prices plummet by more than 30 percent compared to the previous year, which was heavily influenced by concerns about the loss of Russian crude supply. Additionally, natural gas prices dropped significantly following a mild winter, while weak refinery margins mirrored sluggish economic conditions in some key markets.
Despite the decline, ExxonMobil’s Chief Executive Darren Woods expressed that current commodity prices are aligning more closely with historical norms. He also mentioned that the market remains positive, with commodities either in line with or above historic averages. Woods highlighted that demand is still robust.
As a response to their substantial earnings in the previous year, the oil giants increased their capital spending but placed equal emphasis on returning cash to shareholders. During the second quarter, ExxonMobil allocated $8 billion for share repurchases and dividends, a five percent increase from the year before. Similarly, Chevron returned $7.2 billion to shareholders, marking a significant 37 percent rise, as emphasized in its earnings press release. Chevron’s Chief Executive Mike Wirth stated that the company’s financial results remained strong, enabling them to achieve a record cash return to shareholders.
Despite the profits not reaching the extraordinary levels of the previous year, ExxonMobil reported $19.3 billion in profits for the first half of 2023, while Chevron recorded $12.6 billion.
Environmental NGO 350.org criticized these latest financial results as another example of excessive profits gained at the expense of both people and the planet. The group renewed their call for a “renewable energy revolution.”
The decline in profits could draw the attention of officials such as President Joe Biden, who has previously urged oil companies to direct excess cash towards new production instead of shareholder distributions.
Both ExxonMobil and Chevron highlighted their increased investments in the United States, particularly in the Permian Basin located in Texas and New Mexico. This region holds unconventional oil and natural gas deposits. ExxonMobil reported achieving record quarterly production in the Permian and projected an overall 10 percent output increase for 2023. Chevron also noted record quarterly production in the Permian, citing its recently announced $7.6 billion acquisition of PDC Energy, which includes additional acreage in the region.
The stock market reacted to these developments, with shares of ExxonMobil falling 1.5 percent to $103.81 in morning trading, and Chevron experiencing a 1.1 percent decline to $157.99.