Oil and Gas Industry: Upstream, Midstream, Downstream, LNG

In the second quarter of 2026, ExxonMobil earned $14.5 billion under US accounting rules (GAAP). Producing oil and gas earned $7.9 billion of it, while refining crude oil into fuels earned $5.5 billion.

Those are two different businesses inside one industry. The first gains when the oil price rises. The second gains when fuel prices rise faster than crude oil. This guide walks through each stage of the oil and gas industry, who does it, how it earns money and how it reacts to the oil price.

The industry is described by distance from the oil well. Upstream is closest to the well. Downstream is closest to the customer. LNG sits alongside them.

Upstream companies drill wells and sell what comes out at the market price. EOG, Devon, Diamondback and Occidental are mostly upstream businesses. Their revenue follows what they pump.

Diamondback's oil sales were $11.6 billion of its $13.5 billion of oil, gas and gas liquids revenue in 2025, or 86%. EOG's crude oil and condensate (a light liquid produced with gas) were 71% of its $17.7 billion of revenue from its own oil, gas liquids and gas.

Because upstream sells at the market price, a price move falls straight into profit. ExxonMobil's 2025 annual report estimates that, for 2026, each $1 per barrel change in the Brent price, the international oil benchmark, changes its annual Upstream earnings by about $700 million after tax. That covers its equity companies (affiliates it part-owns) and excludes the effect of derivatives.

A $10 move is therefore about $7 billion a year.

Two recent deals show the scale involved. Devon completed an all-stock merger with Coterra Energy on 7 May 2026. Occidental sold its chemicals arm, OxyChem, to Berkshire Hathaway for $9.7 billion in an all-cash deal that closed on 2 January 2026. Excluding OxyChem, oil and gas made 95% of Occidental's 2025 segment income before income taxes.

Midstream companies own the pipelines, terminals, storage tanks and gas plants between the well and the refinery. Marathon Petroleum holds most of its midstream assets in MPLX, a pipeline and logistics partnership.

Marathon's filing says the profit of its pipelines mainly depends on tariff rates and the volumes shipped. A tariff is a fee per barrel moved. In 2025, its Midstream segment made $6.75 billion of adjusted earnings before interest, tax, depreciation and amortisation (EBITDA), a non-GAAP measure. Its refining segment made $6.14 billion.

Downstream companies buy crude oil and sell fuels, chemicals and lubricants. A refinery earns the refining margin, which is the price of the products it sells minus the cost of the crude oil it buys.

Marathon's refining margin was $16.87 a barrel in 2025 (non-GAAP). After refining and distribution costs, the segment kept $5.63 a barrel as adjusted EBITDA (non-GAAP).

The margin follows the gap between product and crude prices. When fuel prices rise faster than the price of crude oil, the margin widens.

ExxonMobil's Energy Products segment earned $5.5 billion (GAAP) in the second quarter of 2026, four times the $1.4 billion of a year earlier. Its filing credits $3,180 million of the rise to stronger refining margins.

Liquefied natural gas (LNG) is natural gas chilled into a liquid, so ships can carry it between continents. LNG companies build and run the plants that do the chilling.

Cheniere Energy sells most of its output under long-term contracts. Customers pay a fixed fee per unit, plus a variable fee linked to Henry Hub, the US natural gas benchmark. As of 31 December 2025, Cheniere's filing counts $107.7 billion of fixed fees within $290.6 billion of expected future revenue over the life of those contracts.

About 90% of the output it expects through the mid-2030s was under contract at that date. The filing says its exposure to oil price movements is limited.

In 2025, Cheniere's income from operations was $9.1 billion (GAAP) on revenue of $20.0 billion. Shell reports LNG within its Integrated Gas segment, which earned $8.0 billion of Adjusted Earnings (non-GAAP) in 2025.

Integrated companies run several stages at once. Their segment reports show where the profit comes from.

The chart groups each company's reported segments into four categories.

ExxonMobil made 66% of its 2025 segment earnings from producing oil and gas and 34% from refining, chemicals and fuel sales. Shell made 40% from gas, LNG and low carbon, 36% from production and 24% from refining and fuel sales.

Shell reports its gas production within Integrated Gas, so its production bar leaves gas production out, while ExxonMobil's and BP's include it.

BP made 61% from production, 10% from gas and low carbon and 29% from refining and fuel sales. Marathon made 52% from midstream and 48% from refining and marketing. Occidental made 95% from production and 5% from midstream and marketing.

Each company reports profit on its own basis, so the shares compare mix and not size.

ExxonMobil uses segment earnings after tax (GAAP). Shell uses Adjusted Earnings. BP uses replacement cost profit before interest and tax. Marathon uses segment adjusted EBITDA. All three are non-GAAP, meaning they are not defined by accounting standards. Occidental uses segment income from continuing operations before income taxes, its reported segment measure.

The shares leave out corporate costs, loss-making segments and, for BP, a small positive consolidation line.

Upstream reacted most in the data above. ExxonMobil's Upstream earnings were $7.9 billion (GAAP) in the second quarter of 2026, 47% above the $5.4 billion of a year earlier. Brent averaged $103 a barrel in that quarter against $68. The filing credits $4,650 million of the change to higher prices, partly offset by lower gas prices.

For all four ExxonMobil segments, see our guide to what ExxonMobil does. For the price side, see how the oil market works.

Midstream and LNG reacted least. Marathon's Midstream segment grew 3.1% in 2025, a year when Brent averaged 14.1% less than in 2024. Cheniere's fixed fees do not move with the oil price.

Gas and oil prices are separate. The chart compares USO (the US oil fund, an exchange-traded fund) with UNG (the US natural gas fund). Both hold futures contracts, which are agreements to buy or sell at a set price on a later date, so their returns differ from spot prices.

From 31 December 2025 to 13 October 2026, USO rose 121% with dividends counted, while UNG fell 7%.

Upstream earned more when oil rose, while midstream fees and LNG fixed fees did not follow the oil price, so each company's segment table shows which stage drives its profit.

The industry has three main segments. Upstream finds and produces crude oil and natural gas. Midstream transports, stores and processes it. Downstream refines it into fuels and chemicals and sells them. Liquefied natural gas (LNG) is a fourth business that turns gas into a liquid for shipping.

It depends on the company and the year. In 2025, production made 66% of ExxonMobil's segment earnings after tax (GAAP) and 95% of Occidental's segment income before income taxes. At Marathon Petroleum, midstream made 52% of segment adjusted EBITDA (non-GAAP). Refining margins can lift downstream sharply, as ExxonMobil's Energy Products segment showed in the second quarter of 2026.

Yes. The same companies often produce both. The stages are the same: production, pipelines and processing, then sales. Natural gas has its own price, though. From 31 December 2025 to 13 October 2026, the US natural gas fund UNG fell 7% while the US oil fund USO rose 121%.

An integrated oil company operates in several stages. ExxonMobil, Shell and BP produce oil and gas, refine it and sell fuels and chemicals. Their segment reports show how profit splits between stages. In 2025, Shell made 40% of its segment profit from gas, LNG and low carbon and 36% from production.

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