Earnings for Exxon Mobil and Chevron fell drastically in the third quarter after the U.S. oil giants raked in record profits during the same period a year ago.

Exxon Mobil Corp. brought in third-quarter earnings of $9.1 billion, or $2.25 per share, the Spring, Texas-based major reported before markets opened on Oct. 27.

That’s down over 50% from the same quarter a year ago, when Exxon raked in record earnings of $19.7 billion, or $4.68 per share.

Chevron Corp. reported third-quarter earnings of $6.5 billion, or $3.48 per share, the morning of Oct. 27.

The California-based major’s earnings fell nearly 40% compared to last year, when Chevron brought in earnings of $11.2 billion, or $5.78 per share, during the same period.

Analysts had anticipated the sharp drops in earnings for both oil companies—Exxon was expected to deliver quarterly earnings of between $2.10 and $2.34 per share, according to Yahoo Finance data; Chevron was expected to bring in between $2.58 and $3.74 per share.

Both companies cited a collapse in oil and gas prices for the lower earnings. Average Brent crude spot prices fell around 14% from $100.53/bbl during third-quarter 2022 to $86.64/bbl during third-quarter 2023, according to Energy Information Administration data.

Natural gas prices have seen even greater volatility: Average Henry Hub spot prices fell over 67% year-over-year from $8.30/Mcf to $2.69/Mcf last quarter, per EIA figures.

Exxon’s earnings dropped by $5.7 billion compared to the same quarter last year, on an adjusted basis, due to a nearly 60% decrease in natural gas realizations and a 14% decrease in crude realizations.

Chevron also cited lower upstream realizations and lower refined product margins as headwinds to profitability during the third quarter.

However, recent increases in commodity prices provided upsides for both companies’ E&P operations.

Rising oil prices contributed as much as $1.3 billion to Exxon’s third-quarter earnings compared to the second-quarter, the company disclosed in a Securities & Exchange Commission filing earlier this month.

Upside in natural gas prices added as much as $600 million to Exxon’s current earnings versus the second quarter.

A confluence of geopolitical and macroeconomic factors has lifted oil prices in recent months, including the Israel-Hamas war, market concerns over broader Middle Eastern instability and production cuts by Saudi Arabia and the OPEC cartel.

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M&A mayhem

October has been a big month for large-scale M&A in the oil and gas industry, with Exxon and Chevron each inking some of their largest acquisitions ever.

Exxon is paying nearly $60 billion in stock to acquire Pioneer Natural Resources, which is expected to deliver Exxon more than a decade of top-tier drilling runway in the heart of the Permian Basin.

The massive merger combines Pioneer’s over 850,000 net acres in the Midland Basin with Exxon's 570,000 net acres in the Delaware and Midland. Combined, the companies will have an estimated 16 Bboe resource in the Permian, the nation’s top driver of oil production growth.

Chevron agreed to acquire Hess Corp. in a $53 billion all-stock transaction, drilling deeper offshore and in the emerging hotspot of Guyana.

Both transactions rank among the largest oil and gas deals ever signed. Exxon’s Pioneer acquisition is the fourth-largest energy-focused deal globally in the past 50 years, according to data from S&P Global; the Chevron-Hess transaction is the seventh-largest.

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