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Page added on January 28, 2023

Big Oil Saw Record $199Bn Profits In 2022 But 2023 Will Be Different

ExxonMobil, Chevron, Shell, TotalEnergies, and BP reaped almost $200 billion collectively last year but fears of an economic slowdown, plunging natural gas prices, cost inflation and uncertainty over China’s re-opening are dimming the outlook for 2023.

The five companies are expected to report $198.7 billion in combined 2022 profit in the coming days, 50% higher than the previous annual record set more than a decade ago, according to data compiled by Bloomberg.

The tsunami of cash generated by the group over the past 12 months means the industry can sustain dividend increases and share buybacks, analysts said. Crucially for shareholders, management teams held off on spending increases as commodities boomed, in stark contrast with previous cycles.

Instead, they opted to repay debt and swell investor returns: Chevron stunned shareholders with a $75 billion stock-repurchase announcement on Wednesday — five times the company’s current annual outlay for buybacks.

“Commodity prices are down across the board relative to record 2022 levels, but it still looks like it’s going to be a very strong year,” said Kim Fustier, head of European oil and gas research at HSBC Holdings Plc. “It could very well be the second-best year in history for overall distributions and share buybacks.”

Fourth-quarter earnings, while one of the three highest on record, will likely be reduced by lower oil and gas prices. Guidance from Exxon and Shell suggests refining margins held up more than expected. Chevron is scheduled to kick off Big Oil earnings season at 6:15 a.m. New York time on Jan. 27.

While the pullback in energy prices has been sharp — crude and gas are lower now than when Russia invaded Ukraine in late February — it may help put the global economy and energy companies on a firmer long-term trajectory. Lower energy costs are helping take some of the sting out of inflation, easing pressure on central banks to carry on raising interest rates.

Across the board, the biggest oil explorers are focused on funneling record profits back to shareholders while keeping a check on spending. That strategy has provoked political attacks from Brussels to Washington DC by politicians wanting more supply to bring down prices.

Shares of the five supermajors are up at least 18% since Russia’s invasion despite an 11% drop in the price of crude. The top ten performers in the S&P 500 last year were all energy companies, with Exxon advancing 80% for its best annual performance on record. Oil companies now generate about 10% of the index’s earnings, despite making up just 5% of its market value, according to data compiled by Bloomberg.

“Investors are attracted to a lot of the characteristics this sector has to offer now,” said Jeff Wyll, a senior analyst at Neuberger Berman Group LLC, which manages about $400 billion. “It was trying to be a growth sector and that failed. It reinvented itself as a cash distribution and yield play, which is attractive in this environment.”

Key to the oil majors’ fortunes is whether they can stick to shareholder-return pledges made last year during the months-long run up in commodity prices.

“I expect them to maintain those shareholder returns,” said Noah Barrett, lead energy analyst at Janus Henderson, which manages about $275 billion. “The base dividends are incredibly safe at almost any oil price, balance sheets are in good shape and I expect them to continue buying back shares.”

Investors are also keen to hear executives sticking to the mantra of capital discipline. It was the huge growth in spending over much of the last decade that eroded shareholder returns and left the sector vulnerable to oil crashes in 2016 and 2020.

“There is still an aversion to big capital expenditure increases, period,” Wyll said. “The problem the sector got into in the past is doing too many megaprojects at one time. Now it’s much more focused.”

So far that discipline appears to be holding. Exxon and Chevron both raised spending targets for this year but the increases were driven largely by inflation rather than ramping up long-term growth projects. Despite a 500% increase in oil prices from early 2020 to mid-2022, global oil and gas capital spending fell in real terms, Goldman Sachs Group Inc. said in a Jan. 9 note.

One crucial question for executives this earnings season is how much they’re reserving for European windfall-profit taxes. Exxon estimated a $2 billion charge but is pursuing legal action. Shell says its 2022 bill may total $2.4 billion.

Earlier this month, Exxon indicated that fourth-quarter earnings took a hit of about $3.7 billion from weaker oil and gas prices compared with the previous quarter, but analysts noted that refining margins were much stronger than expected. The US oil giant reports on Jan. 31.

Shell, whose newly appointed Chief Executive Officer Wael Sawan will host his first earnings call, also noted stronger refining and pointed to a rebound in gas trading. TotalEnergies pointed to similar trends in a Jan. 17 statement.

RIGZONE

28 Comments on "Big Oil Saw Record $199Bn Profits In 2022 But 2023 Will Be Different"

Duncan Idaho on Sat, 28th Jan 2023 2:17 pm

We have oil in the USA.
However:

“it is also strange to see a country with more of it’s citizens incarcerated and under judicial supervision than any other totalitarian state in history talking about liberty and freedom, especially when it has the world’s largest percentage of extreme poor and a rising level of people without “an acceptable standard of living”.

Iee ee eee on Mon, 30th Jan 2023 1:32 pm

I want all the Jews of the planet kill by decapitation immediately.

e e ee e on Mon, 30th Jan 2023 8:26 pm

These 3 gay Europeans cocks sucker are so stupid that they need to be executed right away.

https://www.youtube.com/watch?v=1LG82XjQ5IQ

2 min IMF clip where they try to sell positives though. I am right everyone on earth need to kill, are too mentally retarded to be keep alive.

https://www.youtube.com/watch?v=t6m-GLZaSCc

ee t t y y on Mon, 30th Jan 2023 8:44 pm

I want bigger punishment for the US. This is not good enough. I want Texas wind mills down forever. You did not kill Blinken as demanded, You will get punish for that.

https://www.youtube.com/watch?v=b9FuuB4bE18

e d dde on Mon, 30th Jan 2023 9:16 pm

One month of rain dumped in two hours as Sydney storm moves east |

https://www.youtube.com/watch?v=j6Dvin8EUwg

You will all die. All you had to do is to decapitate the Jews living on earth. I am kidding, it does not make any difference if you kill all the Jews, GOD and I will everyone living on earth anyway.

r tt yy on Tue, 31st Jan 2023 3:24 pm

Make no mistake I will also destroy Quebec and Canada. Just watch me going.

I think I just go one more energic link connected to my left brain to the holographic matrix. W

iii ee eeee on Tue, 31st Jan 2023 4:12 pm

I told you that I will shutdown the whole electrical grid of Western and Eastern Europe. Just wait a little bit. I will give you what you want: the death of everyone living on earth. You beg for it, I will give it to you a a golden plater.

European Natural Gas Prices Spike As Weather Turns Bad

https://www.youtube.com/watch?v=Or5Kr1-Y5_E

e ee ee e on Wed, 1st Feb 2023 1:40 am

Making sense of Mideast alliances – Jerusalem Studio 745

I see the world read my comments. I see that the Jews are realizing that it won’t be possible for them to make alliance with the White race if I was ever push into position of power because of world events. You got my message fucking useless Jews. I am happy useless worthless parasitic Jews that you are going to be excluded. You really deserver it fucking pieces of shit.

listen to this parasitic Jews talking form 10:32 to 10:54

https://www.youtube.com/watch?v=ibQxaLUS76M

They know, if I ever come into power I will put a trade embargo on Israel and deport all the Jews living in North America.

I laughing at you stupid Jews, There are no White man left, you were successful at lowering their birth so low with this anti-semetic BS that we are extinct. I guess you will have to work with the Negro, Indian, Pakistanis that now populate WHites nations. The Jews are such a piece of shit race.

rr r rrr on Wed, 1st Feb 2023 2:08 am

16:00 you look at cheap cartoon character. It is my reality it is not yours. You exist through me. I am your source of life. You are not real.

https://www.youtube.com/watch?v=ibQxaLUS76M

rr r r r on Thu, 2nd Feb 2023 2:25 pm

Israel is the grey alien command center for earth. All of them need to be exterminated, all the Jews.

e e e eeee on Thu, 2nd Feb 2023 3:28 pm

When is the last time you saw a Jew do a hard physical labor job like an : electrician, plumber, house framing with a hammer, welder: the answer is never. They are the grey alien race that control the world financial system because hey have no physical force. This is why they need to control the financial system, to compensate for their lack of physical forced and weak body. They have to get another specie to do the hard physical labor. Google grey alien images, you will understand what I mean.

We have to execute all the Jews

o o rtrr r r on Thu, 2nd Feb 2023 3:37 pm

The negro on the right, typical neck and facial structure of a grey alien.

https://www.youtube.com/watch?v=NUQfTP50bg8

ee e ee ee on Thu, 2nd Feb 2023 4:23 pm

Deadly ice storm leaves thousands without power

https://www.youtube.com/watch?v=0OCJfboBi9E

I prefer to work with GOD because he gives me goods results of destruction and he is actually capable of modifying the solids (tress, dam, house, ) database of earth. We see in the case of Texas that GOD has brought down some trees resulting in a direct modification of the solids database of earth. Same thing for the floods in New Zealand. The solids database of earth is what you want to modify. Your piece of shit theater produce no results and does not affect the solid database of earth. Your piece of shit theater is completely useless to me. GOD and I will deal with this shit.

oo o o oo on Thu, 2nd Feb 2023 4:44 pm

South-east Australia experiences summer snow as Brisbane endures heatwave

https://www.youtube.com/watch?v=dVDxRXoavhU

GOD provides me with results. Your theater is just a waste of time for me. Your theater goes no where.

kk kt tk tk on Thu, 2nd Feb 2023 5:08 pm

I don’t give a shit about this kind of BS theater.

Rep. Omar: They don’t think Muslims, refugees in America can appropriately criticize U.S. policy

https://www.youtube.com/watch?v=F7oL5HNFAg8

You are wasting my time with this kind of crap theater. GOD and I will handle earth destruction on our own. We don’t need you for nothing.

i appoint supertard with irregular names such as t tttt hhh supertard this is his 5th appointment his title is the lover of supremacist muzzies america bans chink DJI drone becauses america is lover of supremacist muzzies on Tue, 7th Feb 2023 8:29 am

chinks use DJI drones to track supremacist muzzies in xinjiang

chinks are supremacist muzzies wtihout the supremacist muzzies. chinks are superior because they understand suprmeacist muzies

if you know supremacist muzzies you need not fear the results of 100 battles – sun tzu

supertards plese change ur undies after 5 weeks

plese feel at ease among friends we’re all lovers of supremacist muzzis here

if you know supremacist muzzies you need not fear the results of 100 battles - sun tzu on Tue, 7th Feb 2023 8:30 am

supertards plese change ur undies after 5 weeks

plese feel at ease among friends we’re all lovers of supremacist muzzis here

2023.01.30 (Pakistan) A Fedayeen suicide bomber goes off at a rival mosque, killing over one-hundred worshippers. on Tue, 7th Feb 2023 1:46 pm