Exxon, Chevron Beat Earnings as Oil Production Hits Record Highs

Major oil companies achieve record production levels despite lower crude prices driving a four-year profit slump

Key Takeaways

• Record production drives earnings beats: Exxon achieved its highest second-quarter oil output in 25 years at 4.63 million barrels per day, while Chevron reached nearly 4 million barrels daily, helping both companies exceed Wall Street profit expectations despite lower oil prices.
• Earnings per share surpass estimates: Exxon reported adjusted earnings of $1.64 per share (beating estimates by 8 cents) and Chevron posted $1.77 per share (6 cents above forecasts), though both saw quarterly profits drop to four-year lows due to crude price pressures.
• Aggressive capital returns continue: Exxon maintains $20 billion in annual share buybacks while Chevron targets $15 billion in repurchases, signaling confidence in cash flow generation amid volatile energy markets and OPEC+ production increases.

Introduction

America’s largest oil companies demonstrate operational resilience as production gains offset commodity price pressures. Exxon Mobil Corp. and Chevron Corp. both exceeded Wall Street earnings expectations this quarter, driven by record-breaking oil output despite facing their lowest quarterly profits in four years.

The results showcase how strategic production scaling and operational efficiency enable energy giants to navigate volatile market conditions. Both companies achieved significant production milestones while maintaining robust shareholder return programs.

Key Developments

Exxon achieved its highest second-quarter oil output since acquiring Mobil over 25 years ago, reaching 4.63 million barrels per day. The company increased net production by 79,000 oil-equivalent barrels per day compared to the first quarter, primarily through expanded Permian Basin operations.

Chevron reached unprecedented production levels of nearly 4 million barrels per day, increasing output by more than 3% to 3.396 million barrels daily. The company completed its Hess acquisition during the quarter, positioning for extended production growth. Both companies reported stronger-than-expected results, despite facing headwinds from international crude prices that declined almost $20 per barrel year-over-year during the period.

The production increases came as many US producers slowed growth in the Permian region. However, Exxon continues expanding its US shale operations while exploring additional acquisition opportunities following its $60 billion Pioneer Natural Resources purchase.

Market Impact

Exxon shares dipped 1% in New York trading despite beating earnings expectations, while Chevron shares rose as much as 2%, making it the top performer among S&P 500 oil stocks. The mixed market response reflects investor uncertainty about longer-term sector prospects.

Exxon reported adjusted second-quarter earnings of $7.1 billion, or $1.64 per share, topping analyst estimates of $1.57 per share. However, this represents a decline from $9.24 billion earned in the same period last year.

Chevron posted net income of $2.49 billion, or $1.77 per share, surpassing expectations of $1.73 per share. Quarterly revenues fell short of projections at $44.82 billion as commodity price pressures offset production gains.

Strategic Insights

The results highlight how operational scale and efficiency improvements enable energy companies to maintain profitability during commodity downturns. Exxon has reduced annual costs by $13.5 billion over six years through asset sales, staff reductions, and operational centralization.

Strategic acquisitions drive long-term positioning as both companies pursue growth through corporate combinations. CEO Darren Woods emphasizes value creation through deals where “one plus one equaling more than three,” indicating continued M&A activity.

Chevron increases its free cash flow growth target by 25%, projecting $12.5 billion by next year assuming oil prices stabilize around $70 per barrel. This represents a shift toward profit-centered operations in key basins.

The companies’ ability to deliver strong operational results while maintaining capital discipline positions them favorably against competitors who face similar commodity price pressures without equivalent production growth.

Expert Opinions and Data

Chevron CEO Mike Wirth stated the Hess acquisition will “extend our production and free cash flow growth profile well into the next decade.” This strategic focus on long-term cash generation supports sustained shareholder returns.

CFO Eimear Bonner emphasized operational flexibility, noting “We’re positioned for all price environments,” indicating resilience even if oil prices soften further due to global oversupply concerns.

Market analysts attribute the strong results to operational efficiency and strategic acquisitions rather than favorable commodity pricing. The companies joined Shell Plc in exceeding market expectations during a challenging quarter for the energy sector.

OPEC+ plans to boost production by 548,000 barrels per day, potentially impacting global prices further. Eight OPEC+ members announced production increases in July, citing a “steady global economic outlook” and low oil inventories.

Conclusion

Exxon and Chevron demonstrate how production excellence and strategic positioning enable profitability despite commodity headwinds. Both companies exceeded earnings expectations while maintaining substantial capital return commitments through share buybacks and dividends.

The quarter establishes operational benchmarks as record production levels offset lower crude prices. These results position both companies to capitalize on future price recovery while maintaining competitive advantages through scale and efficiency improvements.