Key Takeaways
- ExxonMobil and Chevron reported their second-largest profits in a decade on Friday despite a fall in oil prices as strong U.S. oil production boosted revenue.
- Both companies took a hit from lower oil and gas prices, as well as impairment charges for California assets.
- U.S. production was a big driver of profit and both companies could have another strong year for production when their 2023 acquisitions close.
Energy giants ExxonMobil (XOM) and Chevron (CVX) reported their second-largest annual profits in a decade on Friday as strong U.S. oil production boosted revenue.
ExxonMobil posted a better-than-expected profit of $36 billion for 2023, a 35% drop from 2022 and its second-highest annual profit since 2012. Chevron’s $21.4 billion profit for 2023 was down 40% from the year before and marked its highest since 2013.
A decline in oil prices held profits back, as well as impairment charges for California assets. ExxonMobil’s fourth-quarter profit of $7.6 billion was down 40% from the same period a year ago and included a $2 billion impairment charge due to idled assets in California. Chevron’s quarterly profit of $2.3 billion was also down from a year earlier, hurt by $1.8 billion in U.S. upstream impairment charges mainly in California, as well as other charges.
However, a surge in U.S. production helped boost profits, and both companies could have another strong year for production when their 2023 acquisitions close.
ExxonMobil said it ramped production in Guyana and the U.S. Permian basin up 18% from a year ago, and capital expenditures of $7.8 billion in the fourth quarter brought its full-year expenditures above previous guidance. Its $60 billion acquisition of Pioneer Natural Resources in October 2023 is projected to help raise production to almost 1.3 million barrels per day once the deal is finalized.
Chevron’s $54 billion purchase of Hess is also expected to raise production. Chevron’s production for the fourth quarter was up 34% from a year ago, primarily due to its earlier acquisition of PDC Energy for $6.5 billion, which added 266,000 barrels per day in the Permian.
Shares of ExxonMobil ticked 0.4% lower Friday to $101.97 per share, while Chevron shares rose close to 3% at $152.24 per share.