Three of the largest US oil and natural gas companies rank at or near the bottom of a scale assessing alignment with goals set by the Paris Agreement on climate change, according to a new analysis by the financial think tank Carbon Tracker Initiative.

The results contradict the companies' assertions that they support a low-carbon future, the report said.

Carbon Tracker assessed the upstream production and transition plans of the industry's 25 largest companies worldwide, weighing capital and investment transition risks. None were aligned with the Paris pact's goals to limit global warming to 1.5 degrees C or "well under" 2 degrees from pre-industrial levels, the analysis found, using five key metrics to rank the industry.

Exxon Mobil Corp., Petróleo Brasileiro SA - Petrobras, Saudi Arabian Oil Co., Pioneer Natural Resources Co. and ConocoPhillips scored lowest based on their production and greenhouse gas reduction goals, the analysis found. The companies were also ranked on whether their executive compensation is tied to increased production.

The launch of the Carbon Tracker report coincides with the CERAWeek by S&P Global conference, where oil and natural gas executives have been questioning fossil-fuel phase-out efforts and timelines. Companies such as UK-based Shell PLC and BP PLC are among several large oil and gas producers that have scaled back their climate ambitions since 2023.

Asset managers and investors are watching such developments in light of a projected drop in demand for oil in coming years, said Maeve O'Connor, a Carbon Tracker industry analyst and author of the new report.

"If you're an oil and gas company aligned with a very high [global] temperature scenario, your portfolio as an investor could be at risk of generating a lower anticipated return," O'Connor said in an interview. "The impacts of climate change are being felt throughout their portfolios."

Production continues to soar

ConocoPhillips production data and guidance indicate the company is planning to raise oil and natural gas output 47% from 2022 levels by 2032, the report said. Chevron Corp. is looking at a 33% production increase by 2027, the data showed. Neither company responded to requests for comment on the Carbon Tracker findings.

A spokesperson for Pioneer said the company, which projects its total production to rise by up to 7% this year, is not wavering from its climate commitment. ExxonMobil is acquiring the company in a $59.5 billion deal that will more than double the oil major's footprint in the Permian Basin oil region.

"Pioneer has remained steadfast in its commitment to sustainable and socially responsible operations," the Pioneer spokesperson said in an email. "As part of the transaction, ExxonMobil plans to accelerate Pioneer's net-zero emissions plan by 15 years, to 2035."

The only oil company with climate goals Carbon Tracker deemed to be "potentially" aligned with the Paris Agreement goal to zero out Scope 1 and 2 emissions by 2050 was Italy-based Eni SpA.

Overall, BP scored better than any other company with a combined assessment letter grade of D on a scale from A-H. ConocoPhillips was the only company to earn the lowest grade.

Carbon Tracker based its list of the top 25 companies on research firm Rystad Energy's production data for 2022, excluding Russian and fully state-owned companies. Preliminary S&P Global Market Intelligence data through 2023 largely corroborates the rankings.

Deepwater concerns

The Carbon Tracker report noted that leading oil and natural gas companies continue to invest in new, long-term extraction projects it deemed incompatible with the Paris accord's goals to limit global warming.

Such projects include BP's $15 billion deepwater Kaskida project in the Gulf of Mexico set to begin production in 2029, the analysis said. In an email, a BP spokesperson declined to comment on how that project aligns with the company's net-zero plans.

ExxonMobil is a major owner in other large deepwater oil projects off the coast of Guyana totaling $3.6 billion in capital expenditures between 2024 and 2030. ExxonMobil did not return a request for comment on the Carbon Tracker report.

Companies that scored low on production plans offered no long-term production targets or disclosed no forward guidance, the report said.

While US oil companies are defending their increased production, they have also cited plans to invest in lower-carbon fuels, direct air capture and carbon capture to reduce their overall emissions over time.

O'Connor cautioned that such investments, including oil companies' forays into wind and solar, may not deliver on their climate goals or on investor needs.

"Diversification is no guarantee of Paris alignment," the Carbon Tracker analyst said. "What will determine the oil and gas producers' alignment with Paris goals is their absolute output of oil and gas."