Exxon, Chevron eye billions in buybacks as cash flows surge

[NEW YORK] 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 US$10 billion from next year in a move that surprised analysts. Chevron is considering an expansion of its buyback programme 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 US$1.58 a share during the third quarter, compared with the US$1.56 average estimate among analysts in a Bloomberg survey. Net income, excluding some one-time gains and losses, reached US$6.8 billion, the most since 2014.

Exxon rose 1.3 per cent to US$65.14 at 9:37 am in New York, bringing the year-to-date advance to 58 per cent. Chevron climbed 1.7 per cent.

BLOOMBERG