Energy giants' earnings report this quarter is "a bit chilly": ExxonMobil and Chevron both saw their net profits cut in half.

Energy giants have generally performed poorly this quarter. Following Shell and Total's halving of net profits in the second quarter, their American counterparts ExxonMobil and Chevron also faced setbacks in their performance. The weak financial reports from these industry giants highlight the widespread impact of falling energy prices and low refining margins.

ExxonMobil

On Friday, ExxonMobil released its financial report, which showed a third consecutive quarter of declining net profits. This is the longest decline since the oil market crash of 2014-2016, and it is worse than what most analysts had expected. It should be noted that earlier this month, ExxonMobil issued guidance below expectations, and analysts had already significantly lowered their expectations for its performance.

ExxonMobil's adjusted EPS for the second quarter was $1.94, below the market expectation of $2; net profit was $7.9 billion, less than half of the $17.9 billion in the same period last year and $11.4 billion in the first quarter of this year; total revenue and other income were $82.91 billion, with a market expectation of $82.31 billion.

Despite the decline in cash flow, ExxonMobil has pledged to continue steady share buybacks. The company spent $8 billion in the second quarter on buybacks and dividends. Although these expenditures exceeded the free cash flow for the quarter, ExxonMobil has accumulated enough capital in the previous quarters to cover them.

ExxonMobil plans to pay out over $30 billion in dividends and buybacks this year, making it the fourth highest cash return company in the S&P 500 index, behind only Apple, Microsoft, and Google's parent company Alphabet.

ExxonMobil's significant projects are located in Guyana and the Permian Basin in the United States, and the production from these projects increased by 20% in the first half of this year compared to the same period last year. In the second quarter, the oil and gas production from the Permian Basin reached a record 622,000 barrels, with an expected 10% growth this year; Guyana's daily production also reached a record 380,000 barrels.

ExxonMobil's capital and exploration expenditure in the second quarter was $6.2 billion, totaling $12.5 billion in the first half of the year, in line with the forecast of $23-25 billion for the full year, trending towards the higher end of that range. The refining throughput in the second quarter reached the highest level for the same period in 15 years.

Chevron

On the same day, Chevron's financial report showed that its adjusted EPS for the second quarter was $3.08, compared to $5.82 in the same period last year; net profit was $6 billion, compared to a record $11.6 billion in the same period last year and $6.6 billion in the first quarter of this year; revenue and other income were $48.9 billion. Chevron paid a record $7.2 billion in the form of buybacks and dividends in the second quarter, the highest in its history.

Chevron's global net oil-equivalent production increased by 2%. The production outlook for this year is approaching the lower end of the expected range.

Chevron stated that capital expenditures for the Permian Basin have slightly increased this year, and the increase in spending on the Permian Basin is broadly in line with expectations. With the same number of drilling rigs and fracturing operations, field production has increased. The production ratio of the Permian Basin is 50% crude oil, 25% natural gas, and 25% natural gas liquids. The company expects refining margins in the second half of the year to remain at the high levels of the first half.

Energy giants still face challenges

On Friday, ExxonMobil and Chevron's stock prices both fell, closing down 1.2% and 0.5% respectively.

Although they experienced a glorious period last year, energy stocks are still relatively unattractive to investors, which means that energy giants have a long way to go to enjoy the valuation premium of the early 2010s. ExxonMobil was once the largest company in terms of market capitalization in the S&P 500 index at that time.

Currently, the expansion plans of oil giants vary. ExxonMobil's expansion appears to be more aggressive. Chevron expects annual growth of only 3%, but its fastest-growing Permian Basin is facing challenges. Shell and BP recently announced increased spending on fossil fuels, but production is expected to remain largely flat for the rest of this decade.

ExxonMobil and Chevron are actively seeking suitable acquisition targets. In July, ExxonMobil acquired pipeline operator and oil producer Denbury for $4.9 billion, while Chevron agreed to acquire shale drilling company PDC for $6.3 billion in May. Both transactions were all-stock, low-premium deals, indicating that despite Wall Street's push for spending cuts, these companies are still making big bets.

Currently, many energy companies are focusing on transactions related to the most active oil fields in the United States, the Permian Basin in West Texas and New Mexico. Earlier, it was reported that ExxonMobil had preliminary negotiations with Pioneer Natural Resources, a shale giant in West Texas.

Some analysts pointed out that the challenges faced by oil giants are to provide funding for business growth and pay record cash returns to shareholders amid fluctuations in commodity prices.