Exxon Mobil and Chevron, the biggest US energy companies, on Friday reported strong profits for the final quarter of last year, showing that the oil and gas industry remained robust at a time of uncertainty over climate change concerns.
The companies’ earnings were down from the year 2022, when rising prices boosted earnings, but were otherwise the strongest in recent history.
Exxon earned $7.6 billion in the fourth quarter of 2023, down 40% from a year earlier. For all of 2023, the company reported earnings of $36 billion, up from $55.7 billion in 2022. Before that, the last time Exxon had more than $30 billion in a year was 2014.
Chevron reported a profit of $2.3 billion in the fourth quarter, up from $6.3 billion a year earlier. The change was due to lower commodity prices and markdowns, especially in the company’s home state of California. For the year, the company made $21.4 billion, up from $35.4 billion in 2022, but, like Exxon, otherwise its biggest annual profit in a decade.
Companies generated enough cash to fund big dividends and share buybacks. Such payouts are what investors are now looking for in the industry, analysts say.
“In 2023, we returned more cash to shareholders and produced more oil and gas than any year in the company’s history,” Mike Wirth, Chevron’s chief executive, said in a statement. The company said it bought back 5 percent of its shares during the year.
Exxon paid out $14.9 billion in dividends and made $17.4 billion in buybacks last year. Darren Woods, Exxon’s chairman and chief executive, said this exceeded payments to 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% lower than it was last year, while natural gas fell more than 60% in the key European market and 50% lower in Japan and South Korea.
However, the latest earnings of major energy companies showed that they have remained highly profitable and have taken steps to improve the performance of their core businesses.
Exxon, Chevron and other oil companies make some investments in low-carbon businesses, but the cash that funds shareholder payouts comes from the production and sale of oil and gas. Exxon said that during the year, production from two key fields, the Permian Basin in the Southwest United States and Guyana in South America, rose 18 percent.
Both Exxon and Chevron have recently made acquisitions that are likely to increase their oil and gas production. Exxon agreed to buy Pioneer Natural Resources, a leading shale producer, for nearly $60 billion in October, while Chevron reached a deal to buy Hess for $53 billion.
The low-carbon moves these companies make are usually closely related to their existing businesses. Exxon’s Mr. Woods said on a call with analysts on Friday that the company is exploring $20 billion in investments aimed at reducing emissions. Last year, the company paid $4.9 billion for Denbury, a company that owns pipelines to transport carbon dioxide.
The idea, Mr. Woods said, is to sign up high-emitting factories and other facilities along the Gulf of Mexico to remove their greenhouse gases. He said it made sense to use such technologies to try to reduce emissions “rather than tearing up and throwing away the existing infrastructure and industries we have.”
On Friday, two activist investors withdrew a proposal to shareholders to vote on reducing Exxon’s emissions more quickly. Exxon had sued investors in federal court to prevent the proposal from going to a vote. One of the investors, Arjuna Capital, called Exxon’s move “bullying and intimidation.”
On Thursday, Shell, Europe’s biggest energy company, reported a 26 percent drop in adjusted fourth-quarter profit, but still posted $7.3 billion. Shell earned $28 billion for the full year and paid out $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 the company’s costs by $1 billion and aimed to cut at least another $1 billion. It also curtails 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 confronting him at dinner with her views on Shell’s role in climate change, Mr Sawan is not shy about oil and gas. natural gas. He said his company is bringing 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 security that the world needs while providing cash flow,” he said.