Exxon and Chevron Earnings: Battling For America First

(Bloomberg) -- America's Big Two oil majors are having very different Friday mornings.

While Exxon Mobil Corp. is being punished for missed earnings forecasts and weak production, rival Chevron Corp. trounced estimates across the board.

And beneath the headline numbers, a clear gap has opened up in a business close to each company's heart in every sense: U.S. upstream exploration and production.

Exxon turned in a quarterly profit in this business for the first time since late 2014 (not including the one-off boost from tax cuts in the final quarter of last year). Exxon was so pleased with this, it led Friday morning's announcement.

But when it comes to profit per barrel of oil equivalent in the U.S., Chevron is way ahead:

Legacy has a lot to do with this. While both majors are born-again shale enthusiasts these days, Exxon has largely bought its way in, while Chevron is exploiting long-held acreage. The latter is the lower-cost option.

And Exxon's acquisitions included 2010's badly-timed XTO Energy Inc. deal, which has left it with a much bigger proportion of low- natural gas in the mix. While Chevron's overall U.S. production is lower, its oil output is higher than Exxon's and increased 12.5 percent in the first quarter, year over year, versus just 2 percent for Exxon.

Proving they can make the major model work in a shale business pioneered by minnows is the central challenge for both these companies. Both must be thankful for the rally in oil prices helping out -- but Chevron reaps more of the benefit.

To contact the author of this story: Liam Denning in New York at ldenning1@bloomberg.net.

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