Oil Giants Pump Their Way to Bumper Profits

Exxon Mobil and Chevron, the largest U.S. energy companies, on Friday reported sizable profits for the final quarter of last year, showing that the oil and gas industry remained robust at a time of doubts because of climate change concerns.

The companies’ earnings were down from the bonanza year of 2022, when a surge in prices pushed up profits, but were otherwise the strongest in recent history.

Exxon earned $7.6 billion in the fourth quarter of 2023, a 40 percent fall from a year earlier. For all of 2023, the company reported $36 billion in earnings, compared with $55.7 billion in 2022. Before that, the last time Exxon made more than $30 billion in a year was in 2014.

Chevron reported earnings of $2.3 billion in the fourth quarter, down from $6.3 billion a year earlier. The change was due to lower commodity prices and write-downs, especially in the company’s home state, California. For the year, the company made $21.4 billion, down from $35.4 billion in 2022 but, like Exxon, otherwise its biggest annual profit in a decade.

The companies generated enough cash to fund big dividends and share buybacks. Such payouts are what investors now look for in the industry, analysts say.

“In 2023, we returned more cash to shareholders and produced more oil and natural 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 outstanding 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 topped the payouts at other Western energy giants. “I have a great sense of pride in what our people accomplished,” he said in a statement.

In the fourth quarter, the price of a barrel of Brent crude oil, the international benchmark, was 5 percent lower than it was a year earlier, while natural gas was down more than 60 percent in the key European market and 50 percent lower in Japan and South Korea.

Still, the major energy companies’ latest earnings showed that they remained enormously profitable and have been taking steps to enhance the performance of their core businesses.

Exxon, Chevron and other oil companies are making some investments in lower-carbon businesses, but the cash that funds shareholder payouts comes from the production and sale of oil and gas. Exxon said that over the year, output from two key areas, the Permian Basin in the Southwestern United States and Guyana in South America, rose 18 percent.

Both Exxon and Chevron recently made acquisitions that are likely to add to their oil and gas production. Exxon agreed to acquire Pioneer Natural Resources, a leading shale driller, for nearly $60 billion in October, while Chevron reached a deal to take over Hess for $53 billion.

The low-carbon moves that these companies make are usually closely related to their existing businesses. Mr. Woods of Exxon said on a call with analysts Friday that the company was scoping out $20 billion in investments aimed at reducing emissions. Last year, the company paid $4.9 billion for Denbury, a company that owns pipelines for transporting carbon dioxide.

The idea, Mr. Woods said, is to sign up high-emitting factories and other installations along the Gulf of Mexico to take away their greenhouse gases. He said it made sense to use such technologies to try to reduce emissions “rather than tear up and throw away the existing infrastructures and the industries that we have in place.”

On Friday, two activist investors withdrew a proposal for shareholders to vote on Exxon’s cutting its emissions more quickly. Exxon had sued the investors in federal court to prevent the proposal from going to a vote. One of the investors, Arjuna Capital, called Exxon’s move “intimidation and bullying.”

On Thursday, Shell, Europe’s largest energy company, reported a 26 percent decline in adjusted earnings in the fourth quarter, but still made $7.3 billion. Shell earned $28 billion for the entire year and paid out $23 billion to shareholders in dividends and buybacks, the company said.

Wael Sawan, who became chief executive of Shell last year, said he had cut costs at the company by $1 billion and aimed to cut at least another $1 billion. He is also trimming businesses that have become marginal, like onshore oil production in Nigeria.

Whereas his predecessor, Ben van Beurden, liked to tell a story about his daughter’s confronting him at dinner with her views about Shell’s role in climate change, Mr. Sawan is not shy about being in the oil and gas business. He said his company was bringing online fields that would add half a million barrels a day of oil equivalent into production by 2025.

“They will enable us to continue providing the energy security that the world needs while delivering cash flow,” he said.