Exxon Earnings Jump, While Chevron Drops

Exxon Mobil’s second-quarter profits were among its highest ever, bolstered by record production in the Permian Basin and Guyana. The company stretched its lead over rival Chevron, according to a report by The Wall Street Journal.

Chevron posted lower earnings that came in under analysts’ expectations, largely due to narrowed refining margins and the loss of favourable tax items from last year. The company also said it was moving its headquarters to Houston from its longtime base in San Ramon, Calif.

America’s two largest oil companies have experienced a reversal of fortunes since the end of the pandemic. On Friday, their results were underpinned by rising production and fuel sales but offset by anemic natural gas prices and narrowed refining margins.

Both have benefited from a prolonged period of relatively high oil prices. In 2022 and 2023, their historically high earnings landed them among the most profitable American companies.

Exxon and Chevron have reported strong earnings this year, though they are a modest decline from their meteoric rise in 2022 following Russia’s invasion of Ukraine and the resulting energy crisis. Though markets have stabilized, Exxon’s and Chevron’s budget plans call for lower investment spending over the next few years.

While long-term fossil-fuel demand is uncertain in a climate-focused world, the oil giants have benefited thus far from doubling down on oil and gas. In recent months, many investors have largely used the energy sector as a hedge against the highflying tech industry and a source of cash, said Dan Pickering, chief investment officer at Pickering Energy Partners.

“We haven’t seen the broader market embrace energy again like they did in 2021 and 2022,” Pickering said. “Until they do, [energy] is just a proxy against other parts of the market.”

The Big Picture

Exxon and Chevron are locked in a continuing dispute over whether Exxon has a right to match Chevron’s offer for a stake in a generational oil find in Guyana. Chevron last year proposed a $53 billion buyout of Hess, which has a 30% stake in an Exxon-led consortium drilling off the coast of the small South American country.

The Federal Trade Commission said it has paused its antitrust review of Chevron’s megadeal until the arbitration process is complete. Earlier this week, Chevron and Hess said a key arbitration hearing will take place in May 2025, the latest in prolonged delays for the deal.

The dispute has captivated the oil industry, and the stakes are high. Chevron could gain entry to its rival’s most important upstream project, or see its bid for Hess blow up.