ExxonMobil will expand its share buyback programme to $50bn and lift capital spending, as the US supermajor continues to return huge profits to investors despite a political backlash.
In a new plan announced on Thursday, Exxon said it would spend $50bn over the next three years in buying back its own shares, an increase from the current $30bn programme that was due to end in 2023.
The oil industry’s earnings have surged this year after Russia’s invasion of Ukraine sent global crude and natural gas prices soaring, which producers have used to shower cash on shareholders after years of disappointing returns.
US president Joe Biden has criticised Exxon and other oil companies, saying in October they “should not be using your profits to buy back stock or for dividends . . . while a war is raging”.
But the expanded share buyback programme continues Exxon’s focus on funnelling the proceeds from elevated energy prices back to shareholders, rather than splurging on a big new drilling campaign.
The strategy has made Exxon among the market’s top performers this year, with shares up more than 60 per cent even as the broader S&P 500 has fallen.
“The results we’ve seen to date demonstrate that we’re on the right course,” said Exxon’s chief executive Darren Woods.
Exxon will also spend between $23bn and $25bn on energy projects next year, up from around $22bn this year, the company said. Exxon has increased its planned spending on low-carbon projects, focused on carbon capture and storage, biofuels and hydrogen, to $17bn through to 2027, up from its previous guidance of $15bn.
But the Texas-based oil producer is keeping its annual expected spending range at between $20bn and $25bn over the next five years, resisting big spending increases at a time of elevated oil and gas prices as the industry has done in the past.
Exxon’s rival Chevron said on Wednesday that it would increase its spending by 25 per cent next year to about $17bn, including $2bn on its lower carbon business.
Both companies’ spending plans remain far below what they had signalled before the pandemic, which inflicted huge financial losses on the companies. Exxon in 2019 said it planned to spend $30bn to $35bn a year on its business while Chevron had planned annual spending of roughly $19bn to $22bn.
The bulk of Exxon’s spending will go towards oil and gas projects in the Permian shale basin in the US, deepwater projects in Guyana and Brazil and new liquefied natural gas ventures. The company says it will increase total output by 14 per cent from 3.7mn barrels of oil equivalent per day this year to 4.2mn boe/d by 2027.
But the increased spending comes as oil prices have retrenched in recent weeks over fears that an economic slowdown will sap global energy demand.
Brent crude was trading at about $78 per barrel on Thursday, down 20 per cent over the past month and roughly level with where it opened the year, a big reversal after it spiked to near-record highs over the summer.