The three largest U.S. oil companies — Exxon Mobil Corporation (XOM Quick QuoteXOM - Free Report) , Chevron Corporation (CVX Quick QuoteCVX - Free Report) and ConocoPhillips (COP Quick QuoteCOP - Free Report) — revealed that they collectively paid more than $42 billion to foreign governments in 2023, about eight times the amount paid in the United States, per a Reuters report. These revelations are a direct result of a new Securities and Exchange Commission (“SEC”) regulation that required transparency in payments made to foreign governments for the first time. Currently, these stocks carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ExxonMobil's Foreign Payments Dominated by UAE and Indonesia

According to the report, ExxonMobil paid nearly $25 billion to foreign governments, with the United Arab Emirates ($7.4 billion), Indonesia ($4.6 billion), and Malaysia ($3.2 billion) leading the list of recipient nations. In contrast, the Texas-based energy giant paid just $2.3 billion in the United States, including a modest $1.2 billion to the Internal Revenue Service. Despite making $4.2 billion in U.S. upstream earnings, ExxonMobil’s non-U.S. earnings were significantly higher, at $17.1 billion.

While ExxonMobil argued that the comparison between U.S. and overseas payments is misleading, claiming U.S. payments totaled $6.6 billion if state and local taxes were included, the stark contrast between payments to foreign governments and U.S. authorities highlights the global reach and profitability of the company’s operations.

Chevron's Australia Payments Outpace U.S. Contributions

Chevron paid a total of $14.6 billion to foreign governments in 2023, with a significant portion ($4 billion) allotted to Australia. Its U.S. payments were significantly smaller, at just $2 billion. Chevron’s operations in the Permian Basin, covering 2.2 million acres of mostly low or no-royalty land, provide a major advantage for the company’s U.S. operations, keeping overhead costs low and boosting shareholder value.

Like ExxonMobil, Chevron’s profits skewed heavily toward international markets, generating $17.4 billion in upstream profits from abroad compared to just $4.1 billion in the United States. However, Chevron did not criticize the new disclosure rules and expressed its commitment to transparency and accountability.

ConocoPhillips' Global Payments Mostly Foreign-Based

ConocoPhillips reported $6.5 billion in global payments, with only $1.3 billion of that going to the United States. The company refused to comment further, highlighting the wider trend of U.S. energy firms directing most of their payments to foreign governments.

Decade-Long Push for Transparency Leads to New Disclosures

These disclosures came after more than a decade of advocacy by transparency proponents. Section 1504 of the Dodd-Frank Act opened the door for increased scrutiny of oil companies’ global financial transactions, as part of the Environmental, Social, and Governance movement’s push for greater accountability. The rule is aimed at helping U.S. taxpayers gauge whether they are getting a fair share from the extraction of domestic resources, given that the United States has become the world’s largest oil and gas producer, fueled by the Permian Basin boom.

The SEC’s new disclosure rules have offered a fresh look into the significant sums that U.S. oil majors pay to foreign governments, revealing the global nature of their operations and the financial flow outside the United States. These figures raise questions about the fairness of U.S. resource extraction deals. They also suggest that international markets will remain highly lucrative for these energy giants, despite the United States being a major oil producer.