Oil giants are trying to increase their profits

Exxon Mobil and Chevron, the largest U.S. energy companies, reported significant profits Friday for the final quarter of last year, showing that the oil and gas industry remained robust at a time of doubt over climate change concerns.

Corporate profits were down from the bonanza year of 2022, when a rise in prices boosted profits, but were otherwise the strongest in recent history.

Exxon earned $7.6 billion in the fourth quarter of 2023, down 40 percent from the same period in 2022. For all of 2023, the company reported $36 billion in profit, compared to $55.7 billion in 2022. Before that, the last times Exxon made profits in 2014, it was more than $30 billion per year.

Chevron reported a profit of $2.3 billion in the fourth quarter, compared with $6.3 billion a year earlier. The change was due to lower commodity prices and depreciation, especially in the company's home state of California. For the full year, the company earned $21.4 billion, compared to $35.4 billion in 2022, but like Exxon, the largest annual profit in ten years.

The companies generated enough cash to finance large dividends and stock buybacks. Such payouts are what investors are now looking for in the sector, analysts say.

“In 2023, we returned more money to shareholders and produced more oil and natural gas than any year in the company's history,” Chevron CEO Mike Wirth said in a statement.

Exxon paid $14.9 billion in dividends and made $17.4 billion in buybacks last year. Darren Woods, chairman and CEO of Exxon, said this exceeds payouts at other Western energy giants. “I am very proud of what our people have achieved,” he said in a statement.

In the fourth quarter, the price of a barrel of Brent crude oil, the international benchmark, was 5 percent lower than in the same period a year earlier, while natural gas in Europe fell by more than 60 percent on the main European market and on the main European market by 50 percent. lower in Japan and Korea.

Yet the latest results from the major energy companies show that they have remained hugely profitable and have taken steps to improve the performance of their core businesses.

Exxon, Chevron and other oil companies make some investments in lower-carbon companies, but the money that finances shareholder payouts comes from the production and sale of oil and gas. Exxon said that during the year, production from two key areas, the Permian Basin in the United States and Guyana in South America, increased by 18 percent.

Both Exxon and Chevron companies have recently made acquisitions that will likely add to their oil and gas production. Exxon agreed to acquire Pioneer Natural Resources, a leading shale drilling company, in October for nearly $60 billion, while Chevron reached a deal to acquire Hess for $53 billion.

On Thursday, Shell, Europe's largest energy company, reported a 26 percent decline in adjusted profit in the fourth quarter but still earned $7.3 billion. Shell earned $28 billion for the year and paid $23 billion to shareholders in dividends and buybacks, the company said.

Wael Sawan, who became Shell's chief executive last year, said he had cut costs at the company by $1 billion and planned to save at least another $1 billion. He is also pruning businesses that have become marginal, such as onshore oil production in Nigeria.

While his predecessor, Ben van Beurden, liked to tell a story about his daughter who confronted him during dinner with her views on Shell's role in climate change, Mr Sawan does not shy away from the oil and gas world. He said his company is bringing in fields online that would add half a million barrels of oil equivalent per day to production by 2025. “They will allow us to continue to provide the energy the world needs while generating cash flow,” he said.