The world’s largest oil companies are generating record profits, using most of the storms worth tens of billions of dollars to buy back their shares.
The five largest public oil companies, BP, Chevron, ExxonMobil, Shell and TotalEnergies, will report a profit of approximately $ 60 billion in the second quarter. Half of that is occupied by Chevron and Exxon, who reported record profits on Friday.With shell TotalEnergies Bumper earnings and analysts reported Thursday are expecting just as big from next week’s BP.
Oil companies are benefiting from the high energy prices that have risen since Russia’s invasion of Ukraine, and supply is struggling to keep up with demand. Some of these huge returns are being reinvested in expanding businesses, improving technology and hiring workers. However, much of that money is also spent on stock repurchases, which reward shareholders primarily by increasing the value of the company’s stock.
Five oil giants could spend more than $ 20 billion on repurchases in the first half of this year and even more in the second half of this year.
“They say they’re happy with the future of their business,” said Faisal A. Helsi, an energy analyst at Edward Jones.
Chevron, which spent nearly $ 4 billion in share buybacks in the first half of this year, raised its full-year repurchase target from $ 10 billion to $ 15 billion. Exxon, who spent $ 6 billion in the first half of the year, said on Friday that he plans to buy back $ 30 billion in 2022 and 2023, trebling the goal a few months ago.
Shell said it would buy back $ 6 billion in shares in the third quarter, and TotalEnergies’ plans for a $ 2 billion buyback in the third quarter were considered overly conservative in comparison, so the company’s shares were held this week. Not as high as other companies.
Investors are paying close attention to corporate profits this quarter amid growing concerns about the impact of the recession on the economy. Energy companies stand out for their bullishness, especially when compared to companies in other industries. Major banks such as JPMorgan Chase and Citigroup said this month they have suspended share buybacks to save capital and meet regulatory requirements.
Energy companies that take advantage of storms to buy back shares are doubly controversial. President Biden has accused oil companies of benefiting from soaring energy prices, and the UK, home of BP and Shell, has announced special taxes on “abnormal” profits for oil and gas companies. Massachusetts Senator Elizabeth Warren calls them “manipulations,” and fellow Democrats offer taxes on repurchases. Instead of investing in expansion and worker employment, politicians can also spend money on repurchases. Is collecting anger.
