Chevron and Exxon Mobil both posted lower adjusted earnings in a challenging oil market, as oil and gas prices put downward pressure on their refining operating margins, forcing the two oil giants to take charge-offs and write-offs.
That’s thanks to severance charges of $715 million and impairment charges of $400 million.
Both companies reported a significant decline in oil refining margins.
However, the leadership of the two oil giants chose to focus on the positive rather than the negative aspects of the financial reports, such as the efficiencies that boosted oil production, the free cash flow generated by corporate initiatives, and the funds returned to their shareholders.
“In 2024, we delivered record production, returned record cash to shareholders and started up key growth projects,” said Mike Wirth, Chevron’s chairman and CEO, in a statement following the release of the financial report. “Worldwide and U.S. net oil-equivalent production increased 7 and 19 percent, respectively, from last year.”
Wirth enumerated several key projects in the renamed Gulf of America and pointed out the repurchase of more than $15 billion of its shares in 2024, extending its track record of repurchasing shares in 17 out of the past 21 years. “We strengthened our portfolio and committed to reducing costs and maintaining capital discipline, positioning us for significant free cash flow growth,” Wirth said.
Exxon chairman and CEO Darren Woods claimed that the oil giant’s transformation delivered unmatched value in 2024.
However, oil analyst Fanis Matsopoulos, an executive board member of the Athens Chamber of Commerce and Industry, focused on different aspects of the two companies’ financial reports, noting that Exxon and Chevron reported a 67 percent and 72 percent decline, respectively, in refining profits.
“The softening of geopolitical tensions combined with stable demand pushed downward pressure to oil’s price, with Brent’s price showing a year-over-year decline of 3 percent,” he told The Epoch Times via email, providing further insight into the forces behind the squeeze in the oil refining margins of the two oil giants.
Meanwhile, Matsopoulos sees further fallout on these margins if President Donald Trump decides to implement tariffs on oil that derives from Mexico and Canada. “This move will create further problems for refiners that import heavy oil overseas, and at the same time, there is a high possibility of higher inflation,” he said.
In addition, he sees uncertainty continuing in oil markets, stemming from costs of new drilling rigs and demand for oil and its distillates.
“Many countries around the world and especially the European Union will try to avoid repeating the experience from Russian–Ukraine war, which almost vaporized all the economic activities, a fact that leads them renewables,” he said. “Simultaneously using batteries will further synchronize demand and supply discrepancies and reduce the demand for fossil fuels.”
TL Tsang, LMK, a senior analyst at Gimme Credit, sees a mixed picture in the financial results of the two companies.
“Exxon Mobil delivered solid fourth-quarter earnings, with contributions from a 13 percent increase in upstream production and growth in advantaged assets offset by lower chemicals and refining margins,” he told The Epoch Times via email. “The company generated $12 billion of cash flow from operations and returned $10 billion of capital to shareholders.”
“Despite achieving a quarterly record for oil and gas production in the U.S., Chevron’s adjusted earnings declined year over year and sequentially due to weak refining margins in its downstream business,” he said.
“The company will look to the startup of several significant projects, including its Tengizchevroil Future Growth Project and structural cost savings, to lift earnings and cash flow in 2025.”
