Oil Giants Exxon and Chevron Surge as Record Production Fuels Massive Shareholder Payouts
Both companies crushed second-quarter expectations for profit and free cash flow, signaling continued strength in stock buybacks and high-yield dividends.
Shares of energy supermajors Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) both saw gains in early trading Friday after reporting second-quarter results that handily beat analyst expectations. Driven by historic production levels, the oil giants delivered impressive free cash flow, reinforcing their commitment to rewarding investors through substantial share buybacks and dividends.
Record Production Sets the Stage
The foundation of their financial success this quarter was a significant increase in output.
Exxon Mobil announced its highest second-quarter production volume in the 25 years since the Exxon and Mobil merger. The company pumped 4.6 million barrels of oil-equivalent (BOE) per day, with its operations in the Permian Basin contributing a robust 1.6 million BOE per day.
Similarly, Chevron reported that its worldwide and U.S. net oil-equivalent production set new quarterly records. This growth was powered by a 34% jump in production from its Tengizchevroil affiliate in Kazakhstan and a 22% rise in the “Gulf of America.” Meanwhile, its Permian Basin output grew by 14%, reaching one million BOE per day.
This operational strength translated directly into financial performance that pleased Wall Street. Exxon Mobil’s stock rallied 1.1% in premarket trading, while Chevron’s shares rose 0.4%.
Free Cash Flow and Shareholder Returns Exceed Forecasts
For investors focused on shareholder returns, the standout metric was free cash flow (FCF), which is the cash left over after a company pays for its operating expenses and capital expenditures.
Exxon Mobil’s FCF climbed 9.2% year-over-year to $5.39 billion, significantly outpacing the analyst consensus of 9.2 billion** to shareholders in the quarter, consisting of $4.3 billion in dividends and $5 billion in share repurchases.
chevron’s FCF more than doubled, soaring 113% to $4.9 billion, easily surpassing the expected 5.5 billion** to its shareholders, with $2.9 billion paid in dividends and $2.6 billion used to buy back stock.
A Boon for Income Investors
The commitment to dividends makes both stocks attractive for income-focused portfolios.
Exxon Mobil declared a third-quarter dividend of 99 cents per share, implying an annual dividend yield of 3.55%—nearly triple the S&P 500’s average yield of 1.23%.
Chevron declared a quarterly dividend of $1.71 per share, which translates to an even more substantial dividend yield of 4.51%.
The Bottom Line: Profit and Future Outlook
While net income for both companies declined compared to the exceptionally high profits of the previous year, their adjusted earnings per share (EPS) still topped forecasts. Exxon Mobil reported an adjusted EPS of $1.64 against an expected $1.57, while Chevron posted $1.77, beating the consensus of $1.73.
Looking ahead, the companies are positioning for sustained growth. Chevron Chief Executive Mike Wirth noted, “The completion of the Hess acquisition further strengthens our diversified portfolio and positions us to extend our production and free cash flow growth profile well into the next decade.”
Exxon is also actively managing its portfolio, having already repurchased 40% of the shares it issued for the Pioneer Natural Resources acquisition and remaining on track to buy back $20 billion of its stock in 2025.
Year-to-date, Chevron’s stock has gained 4.7% and Exxon Mobil’s has risen 3.8%. While this performance lags the S&P 500’s 7.8% advance, the latest results demonstrate the powerful cash-generating capabilities and shareholder-friendly policies that continue to make these energy titans a cornerstone of many investment strategies.
