Second-quarter Earnings Reveal Global Oil Giants Returning to Core Business

Recently, the second-quarter financial reports of major international oil companies have been released. The results show that these global oil giants continue to refocus on traditional operations, while European oil and gas majors still lag behind their U.S. counterparts in both production and profitability.

Despite weak international market prices, ExxonMobil and Chevron both reported record oil and gas output. ExxonMobil achieved an average daily production of 4.6 million barrels of oil equivalent, driven by strong continued growth in its Guyana block and the acquisition of Pioneer Natural Resources. Chevron increased production through projects in Kazakhstan, the Gulf of Mexico, and the Permian Basin, reaching an average daily output of 3.4 million barrels. Financially, affected by lower prices, both companies saw profit declines: Exxon's net profit was USD 7.1 billion, down 8% quarter-on-quarter and 15% year-on-year; Chevron earned USD 2.5 billion in Q2, compared to USD 4.4 billion in the same period last year. However, both companies view this as normal market fluctuation, especially given that European peers are sticking to their current strategies, and believe low prices will eventually pass.

Europe's two major oil and gas companies, BP and Shell, both recorded production declines in Q2: BP averaged 2.3 million barrels per day, down 3.3% year-on-year; Reuters analysis attributes this to reduced investments in recent years. Shell produced 2.65 million barrels per day on average, a 4.2% decline from the previous year and the lowest level in 20 years, mainly due to asset divestments and investments in alternative energy. On the other hand, although both BP and Shell posted year-on-year profit declines in Q2, their earnings exceeded analysts' expectations, indicating better-than-expected performance. Nevertheless, even disregarding differences in market capitalization, they still need to significantly boost oil and gas production to catch up operationally with U.S. peers like ExxonMobil and Chevron.

Three years after their record-breaking performance in 2022, European oil giants now face persistently lower profits and significantly weaker production compared to their American rivals, necessitating urgent strategic adjustments. According to Reuters analysis, asset sales and reduced investment in oil and gas are the main reasons for this year’s weak performance. This also suggests that BP and Shell’s attempts at energy transition have so far yielded poor results—their recent decisions to refocus on core oil and gas operations serve as clear evidence. Analysts point out that it is only a matter of time before production rebounds following this return to core business activities.