All Pumped Up

Image source: Shutterstock - Ken Wolter, Tada Images

What's going on?

Big Oil’s only getting bigger: Exxon Mobil and Chevron reported staggering results on Friday.

What does this mean?

Exxon and Chevron are the latest big energy firms to report piled-up profit this year. Exxon, for starters, boasted its strongest quarter in its 152-year history. The oil and gas behemoth’s earnings nearly tripled from the same time last year to hit a more-than-expected $20 billion, pumped up by extra production and bumper natural gas prices. Chevron’s results weren’t too shabby either: it almost doubled its profit to hit the $11-billion mark, just shy of the record earnings it made the quarter before. Investors celebrated by sending the two companies’ shares higher on Friday, meaning both stocks have now outperformed the wider market by over 70% this year.

Why should I care?

The bigger picture: Mo money, mo problems.
Exxon’s shareholders will be seeing green, despite their tolerance for dirty fuel: the firm’s increasing its dividend by 3%, which – when layered on top of its $15 billion-a-year share buyback program – means shareholders should see an immense $30 billion cash back this year. But the US president might have something to say about that: he recently accused Exxon of making “more money than God”, and wants the firm (and its heavy-hitting rivals) to invest more in production, which should lower prices at the pump. He might have a point: Exxon’s long-term spending is locked just short of $23 billion a year, 30% below its pre-Covid levels.

For markets: Big Tech’s old news.
Big Tech will be watching Big Oil with envy: tech giants have held the S&P 500’s top spots for the past decade, but their worse-than-impressive earnings have shaken up the seating chart. Exxon, for one, has overtaken Meta’s market value and is back in the index’s top ten stocks for the first time since 2019. After all, Exxon’s predicted to make over $50 billion in profit this year, more than Amazon and Meta combined (tweet this).

Originally posted as part of the Finimize daily email.

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