Big Oil Companies Confident in Weathering Market Downturn

Top international oil firms, including ExxonMobil, Chevron, Shell, BP, and TotalEnergies, have reassured investors that they are prepared to withstand the current market challenges and continue rewarding shareholders with dividends.

Despite the recent market turmoil that saw oil prices plummeting to their lowest levels since 2021, these companies remain optimistic about their ability to navigate through the uncertainties ahead.

Key Points:

  • Shell CFO: Shell will continue buybacks at $50 oil and cover dividends even at $40 oil prices.
  • Big Oil only cut 2% of total capex guidance during the Q1 earnings season.

Analyst Insights:

Analysts believe that Big Oil companies are well-positioned to maintain shareholder payouts at oil prices around $65 per barrel. However, if prices drop below $60 for an extended period, companies may need to make adjustments such as reducing capex and trimming buybacks.

HSBC and Morgan Stanley have lowered their earnings forecasts for Big Oil, anticipating a market surplus that could impact earnings and cash flows in the coming months. Morgan Stanley expects buybacks to be reduced by 10% to 50%, with net debt rising at major oil companies.

Company Responses:

Exxon and Chevron expressed confidence in their ability to weather the market downturn, citing cost-saving measures and ongoing developments that are expected to drive growth. Shell announced a $3.5-billion buyback program, emphasizing its commitment to delivering value to shareholders.

BP, on the other hand, reduced its share buyback program after reporting weaker-than-expected earnings and rising debt. TotalEnergies remains confident in sustaining buybacks despite lower oil prices.

Analysis:

Overall, the current market conditions pose challenges for Big Oil companies, but they are taking proactive steps to mitigate risks and ensure long-term sustainability. Investors should monitor oil prices closely and be prepared for potential changes in company strategies as the market evolves.

It is essential for shareholders to stay informed about industry trends and company performance to make well-informed investment decisions in the energy sector.

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