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Big Oil firms are handing shareholders more money than ever and are promising more going forward in an attempt to reassure investors of their discipline and resilience in the face of an uncertain outlook for fossil fuels.<\/p>\n
The top five Western oil and gas firms \u2013 BP, Chevron, Exxon Mobil, Shell and TotalEnergies \u2013 returned to shareholders over $111 billion in dividends and share repurchases in 2023, according to Reuters calculation.<\/p>\n
That was slightly higher than the $110 billion they returned in 2022, when the group\u2019s profits soared to a record $196 billion after energy prices soared following Russia\u2019s invasion of Ukraine. Net profits dropped sharply in 2023 to $123 billion. All five companies have reported results over the past week.<\/p>\n
\u201cDuring a time of geopolitical turmoil and economic uncertainty, our objective remained unchanged: safely deliver higher returns and lower carbon,\u201d Chevron CEO Mike Wirth told investors last Friday.<\/p>\n
Investors such as pension funds have traditionally held on to oil majors\u2019 shares because of their steady, long-term dividends.<\/p>\n
But the rise of the tech sector, a sharp drop in oil majors\u2019 performance last decade due to excessive spending and oil price volatility as well as the growing environmental concerns have led to a decline in interest in the sector.<\/p>\n
The energy sector accounted for 4.4 per cent of the overall weighting of the S&P 500 index by the end of January, down from around 14 per cent in the last decade, according to S&P data.<\/p>\n
COMPLETE PREDICTABILITY<\/strong><\/p>\n The group has revealed a clear transatlantic divide in strategies in recent years, with Chevron and Exxon focusing on growing oil production while BP, TotalEnergies and Shell invest a higher proportion of capital in low-carbon and renewables.<\/p>\n But the messaging to investors on returns was largely identical in recent days \u2013 stick with us and we\u2019ll pay you.<\/p>\n \u201cWe\u2019re very much focused on ensuring we have a compelling distribution to our shareholders,\u201d Shell Chief Financial Officer Sinead Gorman told investors last week, vowing \u201ccomplete predictability\u201d over returns.<\/p>\n Shell, Chevron and TotalEnergies increased their dividend in the fourth-quarter results, while BP increased the rate of its buybacks. Exxon returned $32 billion to shareholders last year, the sector\u2019s highest.<\/p>\n \u201cOil and gas is investors\u2019 least favourite sector so spending gazillions on large mega-projects for cash flows in 5 years time with uncertain demand trends is very hard to stomach for many investors,\u201d Berstein analyst Oswald Clint said.<\/p>\n \u201cInside the companies, they absolutely remember the sins of the past investment cycles and are pretty determined not to repeat those,\u201d he added.<\/p>\n The sector is expected to make minimal spending increases in 2024, according to Tobias Wagner, Vice President, Senior Credit Officer at Moody\u2019s Investors Service.<\/p>\n The increased discipline is a result of a few factors including investors\u2019 demands for returns as well as an uncertain energy demand outlook, he said.<\/p>\n \u201cCompanies are being more selective and investments face greater hurdles in terms of returns, emissions and regulations.\u201d<\/p>\n \u201cThe credit quality of the sector has improved with more upgrades than downgrades in recent years also reflecting discipline in maintaining balance sheet strength and flexibility,\u201d Wagner said.<\/p>\n Follow the The top five Western oil and gas firms \u2013 BP, Chevron, Exxon Mobil, Shell, and TotalEnergies \u2013 returned over 1 billion to shareholders in 2023 through dividends and share repurchases. This amount was slightly higher than the 0 billion returned in 2022. The group’s profits in 2022 reached a record 6 billion but fell to 3 billion in 2023. The energy sector’s weighting in the S&P 500 index decreased to 4.4% by the end of January, from around 14% in the last decade. Chevron and Exxon have focused on growing oil production, while BP, TotalEnergies, and Shell have invested more in low-carbon and renewables. Shell, Chevron, and TotalEnergies increased their dividends in the fourth quarter, and BP increased its buyback rate. Exxon returned the highest amount to shareholders in the sector, with billion in the previous year. Minimal spending increases are expected in the sector for 2024.<\/p>\n","protected":false},"author":3,"featured_media":2938,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"Default","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4],"tags":[777,186,357,33,3,358,706,308,250,19,618,17,380],"class_list":["post-2937","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cyprus","tag-bp","tag-business","tag-businesstop","tag-companies","tag-cyprus","tag-energy","tag-fossil-fuels","tag-geopolitical","tag-google","tag-russia","tag-top","tag-ukraine","tag-us"],"acf":{"keyphrase":"","keywords":"","sourceimg":"","country-category":""},"yoast_head":"\n
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