Trying to catch up in oil and gas production is difficult enough. It becomes even harder when competitors keep pulling further ahead. That is the challenge now facing Europe’s energy majors, as Exxon Mobil and Chevron post record-breaking output.
Exxon Mobil produced 4.63 million barrels of oil equivalent per day (boed) in the second quarter, a 6 percent increase from the same period last year. This marks its highest-ever second-quarter output, driven by the $60 billion acquisition of Pioneer Natural Resources and rising volumes from low-cost assets in the Permian Basin and offshore Guyana.
The Texas-based supermajor is planning $27 to $29 billion in capital expenditures this year and aims to reach 5.4 million boed by 2030. Chief Executive Darren Woods has also indicated that the company is open to additional upstream acquisitions.
Chevron, though smaller, also reported its highest quarterly output ever at 3.4 million boed, up 3 percent year over year. That increase came from its U.S. shale assets and projects in Kazakhstan. The company expects production to rise by another 500,000 boed in the third quarter after closing its acquisition of Hess earlier this month, following a prolonged legal dispute with Exxon.
European Majors Fall Behind
The picture in Europe is far less optimistic. Shell’s output declined by 4.2 percent to 2.65 million boed, its lowest in at least two decades. That drop reflects recent asset sales and reduced exploration spending earlier in the 2010s, when the company began pivoting away from fossil fuels.
BP’s production fell by 3.3 percent to 2.3 million boed, also the result of reduced investment in upstream assets over recent years. France’s TotalEnergies managed a 3.6 percent year-over-year increase, reaching 2.5 million boed, but it still trails far behind the American companies.
For European players, the opportunity to close the gap is shrinking. Large upstream projects require years of development and significant capital. At the same time, rising supply from OPEC countries and long-term uncertainty about oil demand continue to cloud the outlook.
Limited Growth Ambitions
Production targets set by European companies remain relatively modest. TotalEnergies plans to grow output by 3 percent per year through 2030. BP, which abandoned its previous goal of sharply cutting production, now intends to hold output flat between 2.3 and 2.5 million boed.
Shell is aiming for just 1 percent annual growth in oil and gas production through the end of the decade. Its capital spending on upstream and integrated gas is expected to remain steady between $12 and $14 billion per year through 2028. While the company plans to bring five upstream projects online by 2027, its limited reserves may force it to pursue acquisitions to support long-term production.
BP, still recovering from a leadership crisis in 2023, is advancing several new upstream developments. These include projects in Iraq and a complex deepwater project in the Kaskida field in the Gulf of Mexico. On Monday, the company also announced its biggest oil discovery in 25 years, located in the Bumerangue block offshore Brazil. If commercial volumes are confirmed, the project could bring significant value. However, development will require years and billions in investment.
Valuation Gap Widens
Larger production volumes do not always translate to better shareholder returns, but upstream performance remains a key profit driver. That is reflected in company valuations.
Exxon’s price-to-cash flow ratio stands at 8.2. Chevron follows at 7.7. Both are well ahead of Shell at 5.1, TotalEnergies at 4.6, and BP at 3.6, based on data from LSEG.
At the same time, energy’s share of the S&P 500 index has dropped below 5 percent, down from a peak of 16 percent in 2008. Years of volatile returns, fluctuating commodity prices, and environmental pressures have reduced investor interest in the sector.
European companies have responded by cutting costs and improving efficiency. After years of underinvestment, they are now cautiously increasing upstream activity. But in a capital-intensive industry where scale and speed matter, their efforts may come too late.
Even if Europe’s oil majors accelerate, Exxon and Chevron are not slowing down.
