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Post-explosion American Exxon and Chevron intensify buybacks

Post-explosion American Exxon and Chevron intensify buybacks

  • High prices and margins lift major currencies to the best quarters in history
  • Exxon’s profits surpass the previous record set in 2012

July 29 (Reuters) – The two largest US oil companies are ExxonMobil Corp. (XOM.N) and chevron company (CVX.N)recorded record revenues on Friday, supported by higher crude oil and natural gas prices and after similar results for major European companies the previous day.

American pair, along with British Shell (coincidence) The French TotalEnergies (TTEF.PA), combined to earn nearly $51 billion last quarter, nearly double what the group earned in the same period last year. The four companies have boosted share buybacks in recent months, taking advantage of higher profit margins generated by the sale of oil and gas. Read more

Exxon outperformed rivals with second-quarter net income of $17.9 billion, several billion dollars ahead of the previous record set in 2012, helped by asset sales in Japan. Fifth major, BP Plc (BP.L)reports next week.

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The companies reported strong results in their production units, buoyed by the rise in Brent crude futures, which averaged around $114 a barrel in the quarter.

Higher crude oil prices can reduce the margins of the integrated big oil companies, as they also bear the cost of the crude used in refined products. However, in the wake of the Russian invasion of Ukraine and the shutdown of several refineries around the world in the wake of the coronavirus pandemic, refining margins exploded in the second quarter, outpacing gains in crude oil, adding to profits.

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“The strong second-quarter results reflect a tight global market environment, in which demand has recovered to levels close to pre-pandemic levels and supply waned,” Exxon CEO Darren Woods said on a call with analysts. “The oversupply will not happen overnight.”

The big companies’ results are sure to draw criticism from politicians and consumer advocates who say oil companies are taking advantage of global supply shortages to increase profits and convince consumers. US President Joe Biden said last month that Exxon and others are making “more money from God” at a time when fuel prices for consumers have soared to record levels. Read more

Earlier this month, Britain passed a 25% windfall gain tax on oil and gas producers in the North Sea. US lawmakers have debated a similar idea, though it faces long standing odds in Congress. Read more

Catherine Michaels, Exxon’s chief financial officer, said in an interview with Reuters that the windfall profit tax does not provide “an incentive to increase production, which is what the world needs today.”

Companies say they are only meeting consumer demand, and that prices are the result of global supply issues and a lack of investment. Big companies have adjusted their capital and are resisting increased capital spending due to pressure from investors who want better returns and flexibility during the downturn.

“In the short term, it (cash from oil) goes to the budget. There is nowhere else to go,” Pierre Breper, Chevron’s chief financial officer, told Reuters.

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Oil production has been affected around the world due to the slow return of barrels to the market from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, as well as labor and equipment shortages hampering a faster increase in supplies in places like the United States.

Exxon earlier this year more than doubled its expected buyback program to $30 billion through 2022 and 2023. Shell said it would buy back $6 billion of stock in the current quarter, while Chevron boosted its annual buyback plans to a range of 10 Billions of dollars and 15 billion dollars. , rising from $5 billion to $10 billion.

Exxon shares rose 3.2 percent to $95.60 in morning trading. Chevron shares rose 6.5 percent to $160.06.

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(Reporting by Sabrina Valley) Writing by David Gavin. Editing by Kirsten Donovan and Margarita Choi

Our criteria: Thomson Reuters Trust Principles.