ExxonMobil and Chevron reported a decline in profits in the third quarter of 2024 due to falling commodity prices and weaker refining margins.
After record profits in the years 2022 and 2023, driven by geopolitical tensions and rising commodity prices, U.S. oil companies are showing a slowdown this year. Chevron's Chief Executive Mike Wirth explained that both crude oil prices and refining margins, which were exceptionally strong in the third quarter of last year, have been weaker this year. "It's the oil prices, but also the refining margins, which were very strong in the third quarter of last year and are nowhere near as strong this year," explained Wirth.
The results of Exxon and Chevron reflect the developments of their European competitors. BP reported the lowest quarterly profit since the Covid-19 pandemic, while TotalEnergies in France recorded the lowest profits in three years. Shell was able to cushion its results through the booming liquefied natural gas business.
This year, U.S. natural gas prices have fallen to historic lows due to a persistent oversupply. Global crude oil prices have also been pressured by weak demand and sluggish economic development, particularly in China, one of the largest consumers. Wirth warned that prices could remain under pressure in the near future if Chinese demand continues to be weak and OPEC proceeds with its planned production cuts.
Despite the comparatively weaker profits, the results of Exxon and Chevron exceeded Wall Street's expectations, as both companies reduced costs and increased production, particularly in the Permian Basin in Texas and New Mexico. This contributed to the U.S. crude oil production reaching a record level of 13.4 million barrels per day in August.
ExxonMobil reported a revenue of 90 billion USD, which represents a 1% decrease compared to the previous year. Chevron generated revenues of 51 billion USD, a decrease of 6%. Both companies are returning a large portion of their profits to shareholders: Chevron paid out 7.7 billion USD in dividends and share buybacks, while Exxon returned 9.8 billion USD and announced a dividend increase to continue its 42-year streak of increases.
In the dispute over offshore development off the coast of Guyana, Exxon insists on its right to a share of the project that Chevron wants to acquire through the takeover of Hess for 53 billion US dollars. In this context, arbitration proceedings have been initiated, which are to be negotiated next year.
