Exxon, Chevron Q2 Earnings Top Estimates Despite Oil Production Slump

Exxon and Chevron reported Q2 profits at four-year lows but exceeded estimates due to increased oil production. Despite soft prices, experts believe M&A and shale dominance could drive future growth.

Exxon Mobil and Chevron Corporation reported their second-quarter (Q2) profits at four-year lows, but managed to exceed Wall Street's expectations. Despite a decline in global energy prices and increased oil supply from OPEC+, both companies saw their earnings beat estimates, driven by higher production volumes. Exxon Mobil's Q2 profit was $7.08 billion, or $1.64 per share, down from $9.24 billion, or $2.14 per share, in the same period last year. Chevron's net income was $2.49 billion, or $1.45 per share, with adjusted earnings of $1.77 per share, beating expectations of $1.70 per share [1][2].

The drop in profits was attributed to lower global energy prices and increased OPEC+ oil supply. However, both companies offset the lower prices by ramping up production. Exxon Mobil reported its highest second-quarter upstream production since the merger of Exxon and Mobil more than 25 years ago, with a net production of 4.6 million oil-equivalent barrels per day [1]. Chevron's production in the Permian Basin reached 1 million barrels of oil equivalent per day during the quarter [2]. U.S. net oil-equivalent production was up by 123,000 barrels per day from the year-ago period [2].

The global oil market faces fresh uncertainties after eight OPEC+ members announced they would increase output by 548,000 barrels per day in August. The group cited improving global economic conditions and depleted inventories for the decision, which is expected to further pressure crude prices. While oil briefly surged in June during a 12-day conflict between Israel and Iran, it quickly dropped after the US brokered a truce and launched targeted strikes on Iran’s nuclear infrastructure [2].

Experts believe that mergers and acquisitions (M&A) and the dominance of shale oil could drive future growth for these companies. Comstock Resources, for instance, is looking to sell some of its legacy Haynesville Shale leasehold to reduce debt and invest in its new, mega-Bcf, far western Haynesville wildcat play. The company is exploring the East Texas Angelina River Trend for potential sales [3].

In conclusion, while Exxon Mobil and Chevron reported lower profits in Q2, their ability to beat Wall Street's expectations and increase production volumes indicates their resilience in the face of soft prices and increased OPEC+ supply. The future growth prospects for these companies hinge on M&A and the dominance of shale oil.

References:
[1] https://finance.yahoo.com/news/exxon-mobil-q2-profit-dips-105709714.html
[2] https://timesofindia.indiatimes.com/business/international-business/oil-earnings-slip-exxon-and-chevron-q2-profit-hits-4-year-low-revenue-dips-as-crude-prices-stay-weak-despite-output-rise/articleshow/123045143.cms
[3] https://www.hartenergy.com/exclusives/comstock-may-sell-east-texas-haynesvilles-angelina-river-trend-213692