ExxonMobil and Chevron's third-quarter results are expected to benefit from sharply higher refining margins, as global supply disruption caused by the Middle East and Russia-Ukraine conflicts tightens fuel markets.
Until now, the US majors have used their cash windfall from higher crude prices and the refining squeeze to pay down debt and shore up their balance sheets, and have resisted the temptation to relax their grip on capital spending.
But with the US-Iran war showing no signs of being brought to a conclusion any time soon and oil prices likely to remain higher for longer, that resolve may be tested more severely, and both companies are likely to face questions about their disciplined approach as well as future growth opportunities.
"We find investors continue to seek defensive positioning in a volatile geopolitical environment, favouring strong balance sheets while looking for upside from refining tailwinds and international growth opportunities," Goldman Sachs managing director Neil Mehta says.
Refining margins have surged this year on disruption linked to the Middle East war and Ukrainian attacks on Russian refineries. That has created a headache for US president Donald Trump as he looks to tame fuel costs ahead of the midterms on 3 November, and the top US majors could find themselves in his crosshairs again.
Higher margins may have boosted ExxonMobil's July-September refining results by $4.5bn on the quarter, according to a preview earlier this month. That would only be partly offset by lower oil prices, which could depress results by $1.3bn.
ExxonMobil's shares are likely to continue to benefit from the company's exposure to refining — much greater than its peers — as supply disruptions continue to shore up margins. ExxonMobil has guided for annual share buybacks of about $20bn in 2026, with spending at $27bn-29bn. "Investors raise questions around potential M&A [mergers and acquisitions], given competitive Permian technologies and a premium multiple, although volatile commodity prices remain a key challenge," Mehta says.
Meanwhile, Chevron expects buybacks of $2.5bn-3bn in the third quarter, with full-year spending pegged at the lower end of an $18bn-19bn range.
Other Permians
Investors will be looking for updates on how much progress ExxonMobil is making in improving recovery rates from its Permian operations through a suite of new technologies under development. "It's half of ExxonMobil's global production and we're still in growth mode," head of global exploration John Ardill said in relation to the Permian at a London conference earlier this month.
And there are more resources to be found elsewhere, with technology and scale playing a critical role. "There are more Permian basins out there," Ardill said, referencing an ExxonMobil deal in Azerbaijan involving a basin roughly the same size as the Permian's Delaware section, as well as gas work in Algeria.
Chevron may need to convince investors that plans to invest $7bn in its Venezuelan joint ventures over the next five years will pay off. The company has laid out plans to double its Venezuelan output to around 600,000 b/d by the early part of the next decade. Analysts will also be looking out for details on how contract extension talks are going at Chevron's joint venture in Kazakhstan.
Investors will also look for updates on plans by the US majors to help power data centres needed for the artificial intelligence boom. Earlier this year, Chevron signed a landmark 20-year deal with Microsoft for a west Texas data centre.
Both ExxonMobil and Chevron are expected to publish their third-quarter results on 30 October.
