KEY POINTS
- Exxon and Chevron exceed Q3 profit expectations amid U.S. production highs.
- Both majors outperformed European competitors focused on renewables.
- U.S. production gains may face demand challenges and OPEC supply adjustments.
Notwithstanding the global refining issues and slowing demand growth, U.S. oil titans Exxon Mobil and Chevron have exceeded third-quarter profit projections by leveraging record U.S. crude output.
Both businesses outperformed European rivals like BP and Shell, who are concentrated on renewables but have not yet produced comparable returns, by giving priority to oil and gas expansion.
Record production amid challenging demand
With the help of its purchases of Pioneer Natural Resources and Denbury, Exxon announced record output of 4.6 million barrels of oil equivalent per day (boepd), a 24 percent increase over the previous year.
Despite a delay in the $53 billion purchase of Hess, Chevron increased production by 7 percent to 3.36 million barrels per day, primarily due to improvements in U.S. shale and an expansion of drilling in Kazakhstan.
Potential OPEC output rises and weakening demand in China, the world’s largest oil importer, might put pressure on these production records. Due to concerns about oversupply risks and sluggish global demand, the organization has postponed plans to increase 180,000 barrels per day.
Profit declines offset by U.S. advantage
Global refining challenges caused both businesses’ profits to drop year over year, although the cuts were not as sharp as Wall Street had predicted.
According to Reuters, Chevron reported a profit of $2.51 per share, exceeding expectations of $2.42, while Exxon’s third-quarter profit per share was $1.92, exceeding forecasts by four cents.
As both European companies experienced significant refinery losses, their tenacity stood in stark contrast to BP’s 30 percent earnings decrease and TotalEnergies’ 37 percent decline.
Both Exxon and Chevron produced record amounts of shale from the Permian Basin in the United States. Exxon produced 1.4 million barrels per day, while Chevron produced 950,000 barrels per day, putting it on track to reach 1 million barrels per day the following year. This expansion was made possible in large part by Chevron’s recent acquisition of PDC Energy.
Looking ahead: strategic expansion and market cautions
According to finance head Kathryn Mikells, Exxon intends to grow both its current and new energy areas, indicating ongoing investment. As it intensifies its efforts in Kazakhstan and other areas, Chevron plans to increase production in the Permian Basin and sees promise in international projects.
The success of U.S. oil majors highlights the policy of giving priority to oil and gas profits over renewables, establishing a different pace from European competitors while global markets monitor for any shifts in demand.
Both businesses are focused on increasing production, thus their survival depends on striking a balance between expanding supply and a changing energy market.
