Exxon Mobil and Chevron's adjusted profits for Q1 topped Wall Street expectations. Photo via Chevron

Profit for the two largest oil companies in the U.S. tumbled during the first quarter, a three-month period in which the price of crude and gasoline rocketed higher. It's a setback on paper only, however, the result of financial hedges that backfired after the U.S. and Israel launched attacks on Iran in late February.

Exxon Mobil and Chevron reported quarterly results on Friday, May 1, with adjusted profits for both companies topping Wall Street expectations. The shares of both companies, up sharply this week, ticked higher before the opening bell.

With energy prices depressed at the start of the year, Exxon Mobil and Chevron had arranged hedges to offset volatility, a standard practice in the industry. Companies and investors through hedges lock in a price in advance to protect themselves from futures swings. That can provide them with some predictability on costs.

In the aftermath of an attack by the U.S. and Israel on Iran, however, the physical delivery of oil became impossible with the Strait of Hormuz essentially closed. Exxon and Chevron cannot book gains on those hedges until the crude is physically delivered.

The near closure of the Strait of Hormuz off the coast of Iran is a flashpoint in the war and the source of much of the economic pain being felt globally. About 20% of the world’s oil passes through the strait on a typical day, but the passage has been choked off since the war began in late February.

Exxon earned $4.18 billion, or $1 per share, for the period ended March 31. A year earlier it earned $7.7 billion, or $1.76 per share. The company lost almost $4 billion in the quarter on what it called “unfavorable estimated timing effects” of its hedges.

Removing such one-time impacts, Exxon earned $1.16 per share, 9 cents better than Wall Street projections, according to a survey by Zacks Investment Research predicted. Exxon does not adjust its reported results based on one-time events such as asset sales.

Revenue totaled $85.14 billion, breezing past Wall Street's expectation of $81.49 billion.

First-quarter net production was 4.6 million oil-equivalent barrels per day. That’s down from 5 million oil-equivalent barrels per day in the previous quarter.

“If you look at the unprecedented disruption in the world’s supply of oil and natural gas, the market hasn’t seen the full impact of that yet," CEO Darren Woods said during a conference call. "So there’s more to come if the strait remains closed, why haven’t we seen those impacts manifest themselves fully in the market yet? Well, I think we all know there was a lot of water and a lot of oil in transit on the water, a lot of inventory on the water.”

Chevron reported a first-quarter profit of $2.21 billion, or $1.11 per share. It earned $3.5 billion, or $2 per share, a year earlier.

The company said that its quarter included a $360 million net loss related to a legal reserve and that foreign currency effects lowered earnings by $223 million.

Chevron's adjusted profit was $1.41 per share, easily beating the 92 cents per share Wall Street was calling for. Like Exxon, Chevron does not adjust its reported results based on one-time events such as asset sales.

The company's revenue totaled $48.61 billion, also better than expected.

Exxon and Chevron are among the big drillers reporting earnings this week. On Tuesday BP said that its first-quarter profit more than doubled.

The oil companies' results come at a time when gasoline prices in the U.S. hit new multiyear highs, a point of increasing agitation for travelers, households and also businesses that are particularly sensitive to higher energy prices.

The average price of gasoline in the U.S. hit $4.39 on Friday, according to motor club AAA, up more than 8% this week.

Inflation in the U.S. rose sharply in March, fueled by the largest jump in gas prices in six decades, according to data from the U.S. Department of Labor. The surge in gas prices has squeezed the budgets of lower- and middle-income families, making it more difficult to pay for necessities.

But it’s disrupting businesses as well, particularly those sensitive to higher fuel costs. Airlines worldwide have begun canceling flights as the war in the Middle East strains jet fuel supplies and pushes up ticket prices.

Oil prices eased on May 1, helping to steady the relatively few stock markets open worldwide on the May Day holiday.

The Austin, Texas, company said it made $1.13 billion from January through March compared with $2.51 billion in the same period a year ago. Photo courtesy of Tesla

Tesla Q1 profit falls by more than half, but stock jumps amid production of cheaper vehicles

EV evolution

Tesla’s first-quarter net income plummeted 55 percent, but its stock price surged in after-hours trading Tuesday as the company said it would accelerate production of new, more affordable vehicles.

The Austin, Texas, company said it made $1.13 billion from January through March compared with $2.51 billion in the same period a year ago.

Investors and analysts were looking for some sign that Tesla will take steps to stem its stock's slide this year and grow sales. The company did that in a letter to investors Tuesday, saying that production of smaller, more affordable models will start ahead of previous guidance.

The smaller models, which apparently include the Model 2 small car that is expected to cost around $25,000, will use new generation vehicle underpinnings and some features of current models. The company said it would be built on the same manufacturing lines as its current products.

On a conference call with analysts, CEO Elon Musk said he expects production to start in the second half of next year “if not late this year.”

New factories or massive new production lines won't be needed for the new vehicles, Musk said.

“This update may result in achieving less cost reduction than previously expected but enables us to prudently grow our vehicle volumes in a more capex efficient manner during uncertain times,” the investor letter said.

But Musk gave few specifics on just what the new vehicles will be and whether they would be variants of current models. “I think we’ve said all we will on that front,” he told an analyst.

He did say that he expects Tesla to sell more vehicles this year than last year's 1.8 million.

The company also appears to be counting on a vehicle built to be a fully autonomous robotaxi as the catalyst for future earnings growth. Musk has said the robotaxi will be unveiled on Aug. 8.

Shares of Tesla rose 11 percent in trading after Tuesday’s closing bell, but they are down more than 40 percent this year. The S&P 500 index is up about 5 percent for the year.

Morningstar analyst Seth Goldstein said the company gave guidance about its future that was clearer than in the past, allaying investor concerns about production of the Model 2 and future growth. “I think for now we're likely to see the stock stabilize," he said. “I think Tesla provided an outlook today that can make investors feel more assured that management is righting the ship.”

But if sales fall again in the second quarter, the guidance will go out the window and concerns will return, he said.

Tesla reported that first-quarter revenue was $21.3 billion, down 9 percent from last year as worldwide sales dropped nearly 9 percent due to increased competition and slowing demand for electric vehicles.

Excluding one-time items such as stock-based compensation, Tesla made 45 cents per share, falling short of analyst estimates of 49 cents, according to FactSet.

The company’s gross profit margin, the percentage of revenue it gets to keep after expenses, fell once again to 17.4 percent. A year ago it was 19.3 percent, and it peaked at 29.1 percent in the first quarter of 2022.

Over the weekend, Tesla lopped $2,000 off the price of the Models Y, S and X in the U.S. and reportedly made cuts in other countries including China as global electric vehicle sales growth slowed. It also slashed the cost of “Full Self Driving” by one third to $8,000.

Tesla also announced last week that it would cut 10 percent of its 140,000 employees, and Chief Financial Officer Vaibhav Taneja said Tuesday the cuts will be across the board. Growth companies build up duplication that needs to be pruned like a tree to continue growing, he said.

Musk has been touting the robotaxi as a growth catalyst for Tesla since the hardware for it went on sale late in 2015.

In 2019, Musk promised a fleet of autonomous robotaxis by 2020 that would bring income to Tesla owners and make their car values appreciate. Instead, they've declined with price cuts, as the autonomous robotaxis have been delayed year after year while being tested by owners as the company gathers road data for its computers.

Neither Musk nor other Tesla executives on Tuesday's call would specify when they expect Tesla vehicles to drive themselves as well as humans do. Instead, Musk touted the latest version of Tesla’s autonomous driving software — which the company misleadingly brands as “Full Self Driving” despite the fact that it still requires human supervision — and said that “it’s only a matter of time before we exceed the reliability of humans, and not much time at that.”

It didn’t take the Tesla CEO long to begin expounding on the possibility of turning on self-driving capabilities for millions of Tesla vehicles at once, although again without estimating when that might actually occur. He went on to insist that “if somebody doesn’t believe that Tesla is going to solve autonomy, I think they should not be an investor in the company.”

Early last year the National Highway Traffic Safety Administration made Tesla recall its “Full Self-Driving” system because it can misbehave around intersections and doesn’t always follow speed limits. Tesla's less-sophisticated Autopilot system also was recalled to bolster its driver monitoring system.

Some experts don't think any system that relies solely on cameras like Tesla's can ever reach full autonomy.

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Houston startup secures $5M to turn oilfield wastewater into critical minerals

fresh funding

Houston-based startup Altillion has secured $5 million in seed funding to accelerate the commercialization of its proprietary IRIS and ALIX technologies, which convert oilfield-produced water into valuable minerals.

San Francisco-based EIC Rose Rock and Houston-based Flathead Forge led the round. Altillion says the funding will go toward pilot facilities and commercial deployments as the company looks to scale in the U.S.

“Altillion’s efficient and scalable technologies are needed more than ever to reshape critical mineral recovery and facilitate beneficial use of oilfield brines,” Jay Keener, Altillion’s CEO and co-founder, said in a news release. “We’re uniquely positioned to provide a stable, domestic supply of the critical minerals needed for electronics, batteries, healthcare and national defense technologies. This investment from EIC Rose Rock and Flathead Forge enables us to strategically accelerate this impact and is very timely given the current geopolitical dynamics.”

Altillion's IRIS and ALIX platforms extract minerals like iodine, lithium and copper from oilfield-produced water, geothermal brines and salars. This process allows companies to unlock new sources of revenue while also boosting the domestic critical minerals supply chain. The company announced earlier this summer that it will launch a feasibility project in the Permian Basin and aims to develop a path to commercial-scale implementation in the field.

“We are excited to partner with Altillion to scale and deploy these world-class technologies to access the vast wealth hidden in wastewater,” David Clouse, Managing Director of EIC Rose Rock, added in the release. “With Altillion, we’re expanding our ability to empower the energy industry to domestically source the critical minerals America needs for a robust economy and supply chain.”

Altillion was founded by Keener and COO Scott Buckwald in 2023. Keener previously founded KDH Trading, where Buckwald also serves as COO, according to his LinkedIn page.

Houston's KBR to provide tech for Singapore SAF plant

SAF agreement

Houston engineering and technology contractor KBR has been picked as the technology provider for what’s expected to be Asia's first commercial-scale ethanol-to-jet sustainable aviation fuel (SAF) plant.

The proposed plant on Jurong Island in Singapore is being developed by Keppel Ltd.’s Infrastructure Division and Aster Chemicals and Energy. KBR will provide technology licensing and Front-End Engineering Design (FEED) services based on its PureSAF technology.

The plant has a planned production capacity of up to 100,000 tons of SAF per year. The plant is subject to final investment decisions and regulatory approvals.

“We are looking forward to working with Keppel and Aster on this key project and to support Singapore’s ambition of becoming Asia’s leading SAF hub and advancing the ongoing efforts to decarbonize the country’s aviation ecosystem,” Stuart Bradie, KBR president and CEO, said in a news release.

According to KBR, its PureSAF Technology can process multiple feedstocks like bioethanol, syngas, carbon dioxide and hydrogen and convert them to SAF, diesel and gasoline.

The technology was developed by Swedish Biofuels AB and commercialized by KBR.

“KBR’s PureSAF is a feedstock-flexible, bankable technology that is designed to deliver a 100% drop in jet fuel, ready to power aircraft without blending,” Bradie added in the news release. “We are constantly innovating our SAF solution to make it compatible with feedstock availability in different regions and to enable the aviation industry to transition to low-carbon jet fuel with a cost-optimized approach.

KBR has also entered into a memorandum of intent with Keppel’s Infrastructure Division, which states that the companies will collaborate again on decarbonization efforts across biofuels, plastic recycling, digitalization via AI, and SAF.

KBR announced in October that it would spin off its Mission Technology Solutions business, nicknamed SpinCo. The scaled-down KBR, nicknamed RemainCo, would concentrate solely on sustainability technology and services designed to reduce carbon emissions and support energy transition efforts. SpinCo named its new CEO and CFO earlier this month.

Houston energy expert discusses why hydrogen still has a future

Guets Column

Not long ago, hydrogen was hailed as the next big thing in clean energy. Investors poured in, and countries from Japan to Germany built ambitious hydrogen strategies. It wasn’t a new discovery; hydrogen has been used for over a century in refineries and fertilizers, but it suddenly found itself reborn as the world began working toward decarbonization.

When hydrogen burns, the only byproduct is water. Green hydrogen, produced with renewable power, could replace fossil fuels in everything from trucks to ships to steel mills. But the momentum has cooled. Costs remain stubbornly high, several projects have been delayed or canceled, and policy support has wavered. In the U.S., a change in administration has created uncertainty. In Europe, some governments are slowing funding or revising hydrogen mandates. Even the International Maritime Organization (IMO) recently postponed a key vote on fuel-carbon standards.

Yet as Mike Graff , former Chairman and CEO of American Air Liquide, said in an Energy Forum episode with Ed Emmett at Rice University’s Baker Institute, “The world is always looking to make sure that energy is first available, it’s affordable, and then it’s clean. And I see hydrogen over time evolving in that manner.” He also noted that “companies have produced hydrogen and utilized hydrogen for over 100 years, and they’ve done that very safely… I think we can continue that moving forward.”

China has doubled down on hydrogen as part of its industrial strategy, building massive electrolyzer manufacturing capacity and funding dozens of pilot projects across transportation and heavy industry. Japan and South Korea also stand out as examples of how sustained policy support can drive hydrogen progress.

Where Hydrogen Fits Today

To understand hydrogen’s role now, it helps to remember what it actually does. About 76 percent of global hydrogen is produced from natural gas and used in refineries, fertilizer plants, and chemical production. This so-called “gray hydrogen” is essential but carbon-intensive.

What’s new is the rise of low-carbon hydrogen, “blue” hydrogen made from natural gas with carbon capture, and “green” hydrogen produced by splitting water with renewable electricity. These methods are expensive, but they’re growing. According to the International Energy Agency, global low-emissions hydrogen output rose about 10 percent in 2024.

Hydrogen is also expanding beyond industry. As Graff explained, it already powers thousands of forklifts in warehouses across the U.S. and is beginning to appear in commercial trucking, locomotives, and even aviation prototypes. “You can now drive 600 to 800 miles on a hydrogen fuel-cell truck,” he noted, “and refuel in 30 minutes, just like you would refill for diesel.”

The Cost Challenge and a Gulf Coast Opportunity

So why the slowdown? One word: economics.

Even with generous tax credits, green hydrogen can cost two to three times more than conventional fuels. Electrolyzers are still expensive, though costs are falling as Chinese suppliers introduce low-cost alternatives.

Infrastructure is another hurdle. Pipelines, storage, and fueling networks need to be built from scratch.

But those same challenges point to opportunity, especially along the U.S. Gulf Coast. The region already has one of the world’s largest hydrogen pipeline systems and a well-established energy infrastructure. Texas, in particular, has a head start. It already hosts nearly 1,000 miles of hydrogen pipelines, about 64 percent of the U.S. total, and some of the world’s largest hydrogen storage sites at Moss Bluff, Spindletop, and Clemens. Out of 140 hydrogen plants operating nationwide, 43 are in Texas, supported by extensive refining and natural gas infrastructure. This combination of assets gives the Gulf Coast an unmatched foundation to scale low-carbon hydrogen and integrate production, storage, and end use across industries.

As Ken Medlock , Senior Director of the Center for Energy Studies at Rice University’s Baker Institute, explains in his report: Developing a Robust Hydrogen Market in Texas, Texas has all the critical elements needed to lead in a low-carbon hydrogen economy, including existing infrastructure, a skilled workforce, and proximity to industrial demand centers. That combination gives it a distinct advantage in scaling up hydrogen production and use.

Governments around the world are showing renewed confidence in hydrogen. The European Commission awarded nearly €3 billion to 13 major projects, while Japan and South Korea continue expanding fueling networks. China is leading one of the most ambitious buildouts, with more than 50 planned hydrogen projects and a rapidly growing fleet of fuel-cell vehicles. Despite recent setbacks, global investment has surpassed $100 billion, and projects in places such as Chile, where strong renewables and low-cost Chinese equipment help make projects feasible, are moving toward final investment decisions.

What Comes Next

Hydrogen’s future won’t depend on replacing every fuel, but on filling the gaps where batteries and biofuels fall short.

Transportation: This is where momentum is strongest today. Batteries dominate cars, but hydrogen fuel cells excel in heavy trucks, ships, and planes. As Graff noted, “You can design a commercial vehicle with the same utility as diesel but powered by hydrogen.” Airbus and Boeing are testing hydrogen propulsion concepts, and several ports are experimenting with hydrogen bunkering for cargo ships.

Industry: Steel, cement, and chemicals account for a quarter of global emissions. Hydrogen-based direct-reduced-iron (DRI) steelmaking is being piloted in Europe and Asia and could transform how these materials are produced at scale.

Storage: Hydrogen can store energy for days or weeks, serving as backup for renewables like wind and solar. But storage remains very costly and may only prove viable for the “last mile” of greenhouse gas reduction or grid stability.

These uses may sound niche, but that’s how technologies scale. They start small, gain an economic foothold, and expand as costs decline.

Conclusion

Hydrogen's early, perhaps irrational, exuberance may have cooled, but amidst the rubble of cancelled projects are the beginnings of an industry that could play a vital niche role on the journey towards a lower carbon intensity energy future. As costs fall and infrastructure around the world expands, hydrogen's role will expand into the nooks and crannies of the energy industry.

It won't replace every fuel, but it doesn't have to. Success will come from steady, project-by-project progress.

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Scott Nyquist is a senior advisor at McKinsey & Company and vice chairman, Houston Energy Transition Initiative of the Greater Houston Partnership. The views expressed herein are Nyquist's own and not those of McKinsey & Company or of the Greater Houston Partnership. This article originally appeared on LinkedIn.