As oil prices continued to climb and the market looks for a rebound in production volumes, analysts are banking on improved financials for U.S. oil and natural gas majors Exxon Mobil Corp. and Chevron Corp. during the third quarter.

Due to lackluster production growth over the past two years, the companies' latest quarterly output figures will remain an important focal point for the market, particularly from the prolific Permian Basin, Raymond James senior analyst Muhammed Ghulam said in an Oct. 1 email.

"Since both [Exxon and Chevron] have significant acreage in the Permian, investors will be watching for any details they provide on takeaway capacity issues," Ghulam said.

In the second quarter, Exxon's total production fell to a multiyear quarterly low of around 3.65 million barrels of oil equivalent per day. This was down 7% on the year and compared to an S&P Global Market Intelligence consensus expectation for volume of 3.82 MMboe/d.

However, the company's shale oil output from the Permian and Bakken reached more than 250,000 boe/d in the second quarter, up a sharp 30% from the same period in 2017.

"Exxon's long-term commitment to cost control and a strong balance sheet should enable acquisition opportunities, even beyond its recent Permian acquisitions. We see a strong pipeline of upstream assets and the downstream unit should benefit over the long term from its complex large refineries. However, most of the upstream production growth is likely coming over the medium-to-long term, rather than short-term," according to a Sept. 29 report from CFRA Equity Research.

As of Oct. 3, the S&P Global Market Intelligence consensus third-quarter production estimate for Exxon was 3.77 MMboe/d. The S&P Global Market Intelligence consensus third-quarter normalized earnings per share estimate for the major was $1.25 per share. Exxon will release third-quarter earnings results Nov. 2.

At a meeting with analysts in March, Exxon officials laid out an aggressive plan to more than double earnings to $31 billion by 2025 at 2017 crude oil prices. A key part of that growth includes expanding the company's upstream operations, particularly in the Permian Basin, where it intends to triple its oil and natural gas production to more than 600,000 boe/d by 2025.

The expansion is part of a larger strategy announced in January that the company will invest more than $50 billion in its U.S. operations over the next five years in light of the tax reform that lowers the U.S. corporate tax rate to 21% from 35%.

As second-quarter production slumped, Exxon's adjusted earnings for the period came in at $3.9 billion, or 92 cents per share, down 15% on the quarter and well below the S&P Global Market Intelligence consensus estimate of $1.27 per share.

Aside from the company's lackluster earnings and production figures, Exxon executives have offered little guidance in terms of returning value to shareholders, saying earlier in the year that share buybacks could be possible, but disclosing no other information since then.

At the end of July, California-based Chevron was the latest major to announce it would launch a share repurchase program, which offset a miss in the company's second-quarter earnings. Chevron, which said it would buyback $3 billion of shares, has not repurchased stock since 2014 when global crude prices began to crumble.

Chevron's cash flows have obviously improved, as the company continues to bank on ongoing increased production and rising returns from its upstream investments. Its Permian shale and tight output in the second quarter was 270,000 boe/d, up about 92,000 boe/d, or 50%, from the same quarter in 2017.

The S&P Global Market Intelligence consensus third-quarter production estimate for Chevron was 2.85 MMboe/d as of Oct. 3, which is up slightly from 2.83 MM boe/d in the second quarter.

Chevron hopes to keep ramping production while slashing capital expenses. Chevron cut its expenditures from $35 billion in 2014 to $18 billion this year, a figure it intends to maintain over the next several years.

The sharp decline in expenses, coupled with the company's production growth and improved oil prices, should continue to lift Chevron's free cash flows for the remainder of the year, according to analysts.