Aug 1, 2023, 1:56pm EDT
net zero

A sharp drop in oil and gas earnings could reshape the energy industry

We’ve gathered reporting and analysis on the fallout of oil and gas companies‘ sharp drop in earnings.

REUTERS/Andy Buchanan

Sign up for Semafor Net Zero: The nexus of politics, tech, and energy. Read it now.

Title icon

The News

Western oil majors reported drops in second-quarter earnings of about 50% compared to the same period last year, when Russia’s invasion of Ukraine sent oil and gas prices soaring and pushed profits to record levels. Even with profits remaining high by historical standards, the sharp drop could reshape the companies’ renewable energy production plans.

We’ve collected reporting and analysis on what the drop in earnings means for the oil and gas industry.

Title icon


  • Tighter margins are likely to bring about renewed scrutiny of oil supermajors’ energy transition plans, as priority shifts from energy supply security to decarbonisation. The head of Italy’s Eni said the company remains committed to increasing renewable power and boosting the proportion of gas in its production, while Britain’s BP — whose profits fell 70% compared to the same period last year — announced plans to increase investment in its transition businesses. U.S. supermajors, however, have largely steered clear of any pivot towards renewables. — The Financial Times
  • Despite a steep fall compared to last year, earnings from Exxon and Chevron remained high by historical standards, adding to the supermajors’ record large piles of cash. The almost $14 billion in combined profits for the last quarter could spur an acquisition spree. The companies have had multibillion dollar deals recently, and “aren’t done shopping,” notably in the oil and gas sectors where conditions remain “ripe for a deal frenzy, Collin Eaton wrote in The Wall Street Journal.
  • The bulging war chest could spur Exxon to join several oil and gas companies in expanding into lithium production as a way of diversifying beyond fossil fuels. The company is in talks with carmakers to supply them with the metal — crucial for electric vehicles — as well as with battery makers. Exxon has said that there is a “natural synergy” between lithium and oil and gas extraction. — Bloomberg
  • Although drilling for new oil discoveries has fallen out of favor with some investors in the West, it is still very much in vogue in Russia. Rigs in the country drilled close to 15,000 kilometers — more than 9,000 miles — of production wells in June, an almost 9% increase on the same period last year, “setting a post-Soviet production-drilling record” according to an expert at Moscow-based BCS Global Markets. — Rigzone