Exxon Mobil Corp and Chevron Corp added momentum to a nascent recovery in the US oil industry as they reported bumper cash flow, a dramatic improvement after a torrid 2020.
The energy giants generated enough cash to cover dividends, debt payments and project spending in the first quarter, the first time they’ve managed to do that in more than a year.
The results are especially significant for Exxon because they signal a turnaround from its most difficult period in at least four decades. The gains provides breathing room for CEO Darren Woods as he seeks to persuade skeptical shareholders that his fossil fuel-based strategy can profitably navigate the energy transition.
Chevron foreshadowed strong cash flow when it raised dividends above pre-pandemic levels, beating all its rivals. But investors signalled that they won’t be satisfied until the explorer also restores share
buybacks, something Chief Financial Officer Pierre Breber was loathe to predict.
Noteworthy was the absence of a perennial feature of oil-price rallies: Plans to ramp up crude output. Instead, the biggest US drillers held firm to austerity measures adopted during the darkest days of last year’s market crisis, easing concerns that gushing cash flow would spark another cycle of disastrous production growth.
“It’s really is a 180-degree turnaround from a year ago,” said Neal Dingmann, an analyst at Truist Securities. “What still resonates from both of these companies is the capital discipline.” Exxon’s free cash flow, a key metric watched by Big Oil analysts, reached the highest since 2018, allowing the Texas oil titan not only to fund the S&P 500’s third-largest dividend but also invest in key projects in Guyana and the Permian Basin.