Oil Supermajors Face Profit Decline: Chevron Narrows the Financial Gap with Exxon Mobil

The Energy Titans Report: Profit Declines Amid Normalizing Prices

The world’s two largest Western oil supermajors, Exxon Mobil (XOM) and Chevron (CVX), both reported a substantial decline in quarterly profits, reflecting the inevitable normalization of global commodity prices compared to the extraordinary highs seen in the previous year. While both companies remain immensely profitable, the results underscore the volatility inherent in the energy sector.

Crucially, the latest earnings period (Q3 2024) revealed a tightening competitive dynamic: Chevron demonstrated relative operational resilience and strategic gains, effectively narrowing the financial performance gap with its larger rival, Exxon Mobil.

The profit drop was anticipated across the industry, as the benchmark prices for crude oil and natural gas have stabilized significantly since the peak volatility following the 2022 energy crisis. However, investors and analysts focused on operational efficiency and production growth, areas where Chevron showed particular strength.

Financial Performance Snapshot: A Year-Over-Year Comparison

Both supermajors saw their net income fall sharply when measured against the record-breaking figures of Q3 2023. The previous year’s results were inflated by geopolitical instability and tight supply, making the year-over-year (YoY) comparison challenging.

Exxon Mobil (XOM) Results

Exxon Mobil reported net income of approximately $9.1 billion for the quarter, a steep drop from the $19.7 billion reported in the same period last year. Earnings Per Share (EPS) came in at $2.27, down from $4.68 YoY. Total revenue also saw a significant reduction, falling by roughly 19% to $90.7 billion.

Chevron (CVX) Results

Chevron, while smaller in scale, reported net income of around $6.5 billion, down from $11.2 billion YoY. Its EPS stood at $3.45, compared to $5.78 previously. Revenue declined by approximately 17% to $54.1 billion.

Despite the declines, both companies generated massive free cash flow, which continues to fuel significant shareholder returns through dividends and share buyback programs—a key metric for investors in the mature energy sector.

The Driving Force Behind the Decline: Commodity Price Volatility

The primary factor driving the lower profits was the substantial difference in the price environment between Q3 2023 and Q3 2024. The Upstream segment (exploration and production) is the largest profit driver for both companies, and its profitability is directly tied to the price of oil and gas.

In Q3 2023, oil prices averaged significantly higher, and natural gas prices, particularly in Europe, were near historic peaks. By Q3 2024, while prices remained healthy, they had moderated considerably. This shift directly impacted the realized prices for the crude oil and natural gas sold by both companies.

Furthermore, the Downstream segment (refining and chemicals) also faced headwinds. Refining margins—the profit made from turning crude oil into products like gasoline and diesel—were exceptionally high in 2023 due to capacity constraints. These margins have since softened as global refining capacity has recovered, contributing to lower overall earnings.

“The market environment has shifted from extreme volatility to a more sustainable, albeit lower, baseline. Our focus now is purely on operational excellence and volume growth to offset price moderation,” stated a representative from one of the supermajors during the earnings call.

Operational Excellence: How Chevron Is Closing the Gap

While Exxon Mobil remains the larger entity, Chevron’s operational performance in key growth areas is allowing it to gain ground in terms of efficiency and relative growth rate. The critical battleground remains the Permian Basin in the United States and major international projects.

Production Highlights and Strategic Focus

1. Permian Basin Dominance: Both companies are heavily invested in the Permian, but Chevron’s output growth rate in the region has been particularly impressive. Chevron reported a 14% increase in Permian production volumes, demonstrating highly efficient well development and execution.
2. Exxon’s Guyana Engine: Exxon Mobil continues to rely heavily on its massive, low-cost developments offshore Guyana. While Guyana remains a long-term growth engine, the pace of new project startups slightly lagged in the quarter, impacting immediate volume gains.
3. Acquisition Strategy: Chevron’s strategic acquisition of Pioneer Natural Resources (announced in late 2023 and pending regulatory approval in 2025) is a game-changer. This move significantly bolsters Chevron’s position in the Permian, directly challenging Exxon’s scale and providing a clear path to sustained, high-margin production growth that will further narrow the gap in future quarters.
4. Cost Control: Chevron demonstrated tighter control over operating expenses, which helped cushion the impact of lower commodity prices more effectively than Exxon Mobil, whose operational costs rose slightly due to project ramp-ups.

In essence, while Exxon Mobil’s absolute profit numbers are higher, Chevron’s ability to deliver strong production growth and manage costs in a declining price environment signaled superior operational execution for the quarter, justifying the narrative that it is rapidly becoming a more formidable competitor in terms of profitability per barrel.

Investor Outlook and Capital Allocation

The market reaction to the earnings reports was mixed but generally focused on the future capital allocation strategies of the two giants.

Shareholder Returns Remain Paramount

Both companies reaffirmed their commitment to returning capital to shareholders, a policy that has made them attractive defensive stocks in a volatile market. Exxon Mobil maintained its robust share buyback program and dividend commitment, while Chevron announced a 7% increase in its quarterly dividend, signaling confidence in its long-term cash flow generation capabilities.

Strategic Capital Expenditure

Capital expenditure (CapEx) remains focused on high-return, low-carbon intensity projects. Exxon Mobil continues to pour billions into its Guyana and Permian assets, while Chevron is prioritizing the integration of its upcoming Pioneer assets and expanding its liquefied natural gas (LNG) portfolio, particularly in Australia.

This continued investment ensures that even as profits moderate from peak levels, the underlying production base is expanding, positioning both companies to capitalize immediately when commodity prices inevitably rise again.

Key Takeaways for the Energy Sector

For investors and industry observers, the Q3 2024 earnings reports confirm several critical trends in the supermajor space:

• Price Moderation is the New Reality: The era of pandemic-driven and geopolitical-crisis-driven record profits is over, replaced by a more stable, yet still highly profitable, pricing environment.
• Operational Efficiency is Key: Volume growth and cost control, particularly in the Permian and Guyana, are now the main drivers of competitive advantage, not just commodity prices.
• Chevron’s Strategic Ascent: Chevron’s strong production growth and strategic acquisitions are positioning it as a rapidly growing threat to Exxon Mobil’s traditional dominance in the Western energy landscape.
• Focus on Shareholder Value: Both companies prioritize free cash flow generation to maintain generous shareholder return programs, reinforcing their status as income stocks.

What’s Next: Integration and Global Demand

Looking ahead into 2025, the market will closely monitor the integration progress of Chevron’s Pioneer acquisition. Successful integration will be critical for Chevron to sustain its momentum and permanently solidify its position as a closer competitor to Exxon Mobil.

Furthermore, global energy demand, particularly from Asia, and the ongoing geopolitical stability in key production regions will dictate commodity prices. While the profit declines were steep on a YoY basis, the underlying operational health and strategic positioning of both Exxon Mobil and Chevron suggest they are well-prepared for the next phase of the energy cycle.