Chevron, Exxon eye billions in stock buybacks
Companies decide to reward shareholders, not expand drilling
Exxon Mobil and Chevron are plowing windfall profits into share buybacks as soaring energy prices boost cash flows.
Exxon will revive repurchases for the first time since 2016, spending as much as $10 billion from next year in a move that surprised analysts. Chevron, based in San Ramon. is considering an expansion of its buyback program after surging natural gas prices and oil-refining returns drove free cash flow to an all-time high in the last quarter. Shares of both companies climbed.
The oil giants are using windfall profits to reward shareholders rather than ramp up spending on new drilling as was done during previous booms. That’s a blow to energy consumers around the world as supply shortages and price spikes spark inflation concerns. Both companies kept 2022 budgets within previously guided ranges.
With commuting and air travel picking up, there’s “strong demand across our products with more recovery expected” during the current quarter, Chevron Chief Financial
Officer Pierre Breber said in an interview. “We’re a better company than we were pre-Covid. Costs are down, production is up, and we’re much more capital efficient.”
Exxon earned $1.58 a share during the third quarter, compared with the $1.56 average estimate among analysts in a Bloomberg survey. Net income, excluding some one-time gains and losses, reached $6.8 billion, the most since 2014.
Exxon rose 0.6% to $64.71 at 11:39 a.m. in New York, bringing the year-todate advance to 57%. Chevron climbed 1.1%.
Double-digit returns
Another surprise was Exxon’s announcement of a fourfold increase in low-carbon investments just months after activist investor Engine No. 1 replaced a quarter of the oil giant’s board.
“We expect double-digit returns across all our businesses and we don’t look at this business really any differently,” Chief Financial Officer Kathryn Mikells said during a conference call.
Crucially, Exxon’s longterm capital budget is unchanged, indicating less cash available for fossilfuel projects.
Chevron’s quarterly profit excluding one-time