Profits Down, Dividends Up US Oil Giants Prioritize Shareholder Rewards
NEW YORK: ExxonMobil and Chevron, two US oil giants, reported lower profits compared to previous years due to the global decline in commodity rates. Both companies, however, increased shareholder payouts.
ExxonMobil’s profits fell 56% to $7.9 billion, with revenues down 28% to $82.9 billion. Chevron’s profits declined 48% to $6.0 billion, while revenues dropped 28% to $48.9 billion.
The second quarter of 2023 saw US crude prices down more than 30% compared to the year-ago period, which was affected by concerns about Russian crude supply due to the invasion of Ukraine. Natural gas prices also dropped after a mild winter, and refinery margins were weak due to sluggish economic conditions in some markets.
ExxonMobil’s Chief Executive, Darren Woods, stated that today’s commodity prices are more in line with historical norms, describing the market as “fairly constructive” with commodities at or above historic averages. He also mentioned that demand is “pretty robust.”
Both ExxonMobil and Chevron increased capital spending in response to the past year’s windfall but also focused on returning cash to shareholders. In the second quarter, ExxonMobil spent $8 billion on share repurchases and dividends, while Chevron spent $7.2 billion, marking a 37% increase.
Despite being lower than the year-ago period, ExxonMobil reported $19.3 billion in profits for the first half of 2023, and Chevron reported $12.6 billion.
Environmental NGO 350.org criticized the profits made by oil companies and called for a “renewable energy revolution.”
These results may attract attention from officials like President Joe Biden, who has encouraged oil companies to invest excess cash in new production instead of shareholder distributions.
Both ExxonMobil and Chevron highlighted increased investment in the United States, particularly in the Permian Basin in Texas and New Mexico, known for its unconventional oil and natural gas deposits. ExxonMobil reported record quarterly production in the Permian and aims for a 10% overall increase in output in 2023. Chevron also achieved record quarterly production in the Permian and recently announced a $7.6 billion acquisition of PDC Energy, which includes additional acreage in the region.
ExxonMobil’s shares fell 1.5% to $103.81, and Chevron’s shares dropped 1.1% to $157.99 during morning trading.
