While most companies cut production when prices fall, oil behemoths Exxon and Chevron are doing exactly the opposite. The two energy titans are ramping up their output for 2025, targeting the upper range of 6-8% growth. And that’s not even counting the Hess assets Exxon recently gobbled up. Talk about swimming against the current.
In a market where rivals cut back, Exxon and Chevron boldly boost production despite falling prices—a high-stakes gamble on their operational efficiency.
It’s Economics 101 – when there’s too much of something, prices drop. When prices drop, you make less of that thing. Simple, right? Apparently not for these guys. They’re pumping more oil into an already flooded market where prices keep sliding downward. Bold move. Or crazy. You decide.
The strategy seems counterintuitive, but there’s method to the madness. Both companies have slashed their break-even costs through fancy drilling techniques and digital wizardry. This aligns with the industry-wide projection of upstream oil investments reaching $570 billion in 2024. They’re betting big that their massive scale and integrated business models – from well to gas pump – will shield them from market volatility that crushes smaller players. Exxon’s impressive record 1.7 million barrels of oil equivalent per day in Q3 demonstrates their commitment to this aggressive strategy.
For investors, it’s a mixed bag. More production means more cash flow, even at lower prices. The oil giants are still promising fat dividends and buybacks. Wall Street likes that part. The companies keep hammering home their message: “Trust us, we’re playing the long game here.”
Meanwhile, their competitors are cutting back, following the traditional playbook. Exxon and Chevron? They’re grabbing market share while others retreat. It’s like watching someone double down at a blackjack table when the odds look terrible.
The risk is obvious. If prices tank further, even these behemoths will feel the pain. But their balance sheets are rock-solid, and their vertical integration gives them flexibility smaller players can only dream of.
References
* https://www.aol.com/articles/exxon-chevron-hike-oil-production-195700046.html
