Despite pleas from politicians to ease the burden on
consumers, the biggest US oil explorers are focused on rewarding investors
while keeping drilling budgets in check. Exxon tripled its share- buyback
programme to US$30 billion and Chevron said it will repurchase a record US$10
billion of stock before the end of this year.
Big Oil is among the biggest corporate winners from Russia’s
increasing isolation nine weeks into an invasion that helped push crude to a
14-year high. While four of the five supermajors are incurring multi-billion
dollar writedowns as they exit Russia, those paper losses have been outweighed
by blossoming cash flows.
Exxon’s first-quarter earnings, excluding a US$3.4 billion
impairment due to Russia, were the highest since 2014 while Chevron’s were the
best since 2012.
Still, both companies fell short of Wall Street expectations
amid weaker-than-expected refining results. Even as they profited from climbing
oil prices, that same rally elevated feedstock costs for their refineries,
triggering hundreds of millions in losses at their overseas plants.
JPMorgan analyst Phil Gresh described the factors that
dinged refining results as “transitory” and predicted they will reverse.
Exxon’s “large buyback increase to US$30 billion should more
than offset slightly disappointing 1Q numbers, largely driven by one-offs,”
Jefferies International Ltd. analyst Giacomo Romeo wrote in a note.
Politicians in the US and Europe have criticised Big Oil for
reaping massive profits as consumers struggle with surging prices for motor
fuels, sparking calls from some quarters for windfall-profit taxes.
Chevron countered by increasing its growth target in the
prolific Permian Basin to 15 per cent from 10 per cent despite rising cost
inflation in the region. The company has no plans to change its medium-term
spending target, chief financial officer Pierre Breber said in an interview,
noting that the current range allows for a US$4 billion increase over the
coming years.
“We have space in the existing guidance to increase
investment in both our traditional and new energy businesses,” Breber said.
Exxon, which had been focused on repaying debt accrued
during the pandemic, now is accelerating oil output Guyana, where it made the
world’s largest oil discovery of the past decade. The company’s Liza Phase 1
operation is currently producing 10,000 barrels above daily nameplate capacity.
Another project in the area, Payara, is running five months ahead of schedule
and is due to come online before the end of next year
However, those increases will largely offset declines
elsewhere. Exxon’s production in the first quarter was equivalent to 3.7
million barrels a day, the lowest since its 1999 merger with Mobil. Still,
chief executive officer Darren Woods sees “positive momentum” due to the
absence of weather-related shutdowns, he said in the first-quarter profit statement.
Chevron is the only supermajor not to report a writedown
related to Russia. The company’s main Russian entity is the Caspian Pipeline
Consortium, which transports crude from its giant Tengiz operation in
Kazakhstan to the Black Sea. The pipeline was damaged in a recent storm but
Kazakh officials expect it should resume full operations shortly.
“Repairs are complete and crude from Kazakhstan is operating
normally, transiting through Russia on CPC and loading,” Breber said. “We’re
back to full production and full loadings out of CPC.”
0 comments:
Post a Comment