Exxon and Chevron to Report Record Profit of 100 Billion

Exxon and Chevron to Report Record Profit of $100 Billion in 2022

The surge in oil and gas prices will push US supermajors Exxon and Chevron to record profits in 2022, whose combined annual profits will reach nearly $100 billion, analysts say.

The two oil and gas giants benefited from soaring oil and gas prices following the Russian invasion of Ukraine. Although oil prices traded below $90 a barrel in the final weeks of 2022 and prices are up only about 10% year-on-year over the past year compared to 2021, extreme volatility and frequent spikes above $100 a barrel helped All oil companies, including America’s largest integrated companies, are generating record or near-record quarterly earnings and cash flows.

Exxon and Chevron’s full-year earnings are also likely to hit record highs. Exxon is expected to report record earnings of up to $56 billion for 2022, while Chevron’s earnings are expected to top $37 billion, also a record high, according to estimates by S&P Capital IQ cited by the Financial Times.

The supermajors’ record quarterly profits have drawn repeated criticism from President Joe Biden and his administration officials, who have slammed corporate strategies to encourage share buybacks and increase dividends rather than “pass on the savings” to “reduce prices at the pump.” . American consumers.

Exxon and Chevron’s quarterly earnings following the Russian invasion of Ukraine were already a hint that full-year earnings for 2022 would be at record highs.

Chevron posted its highest-ever quarterly earnings in the second quarter, thanks to high oil and gas prices and tight fuel markets that led to multi-year high refining margins. For the third quarter, Chevron posted its second-highest quarterly profit ever on increased oil and gas demand and increased U.S. production. Exxon posted a record profit of $19.66 billion for the third quarter, beating the previous quarter’s record of $17.9 billion. Related: Gazprom targets fast-growing Chinese market as its exports plummet by 50%

Chevron is “on track to exceed its 2021 free cash flow record in 2022,” CFO Pierre Breber said on October’s third-quarter earnings call.

Chevron said last month that its organic investments in 2023 would be $14 billion for 2023, consistent with its “long-term plans to safely deliver higher returns and lower carbon emissions,” according to chairman and CEO Mike Wirth.

“Despite inflation, our investment budgets remain in line with previous forecasts,” said Wirth. “We’re winning back investors with capital-efficient growth, a strong balance sheet and more cash return to shareholders.”

Exxon’s corporate plan through 2027, also unveiled in December, keeps annual capital expenditures at $20 billion to $25 billion while lower-carbon investments increase to around $17 billion. Investments in 2023 are expected to be between $23 billion and $25 billion to increase supply and meet global demand.

“We view our success as an ‘and’ equation in which we can produce the energy and products that society needs – and – lead in reducing greenhouse gas emissions from our own operations and those of other companies,” said the Chairman and CEO Darren Woods.

Even as they increase investment in clean energy solutions, both supermajors say they would continue to supply oil and gas as the world runs on fossil fuels for years and decades to come.

However, the strategy has drawn criticism from both environmentalists and the White House. Activists accuse the oil companies of greenwashing, while the Biden administration accuses the companies of “war profits” and not investing in American supplies, and threatens windfall taxes on those who don’t.

If oil companies don’t invest in increasing production and refining capacity, “they will pay a higher tax on their excess profits and face other restrictions,” President Biden said in October.

With US gasoline prices falling in recent weeks, the rhetoric blaming the oil industry has eased, at the expense of the government acknowledging falling prices at the pump.

On several occasions, the American Petroleum Institute (API) has issued statements following criticism from the Biden administration. In a recent one from late October, API President and CEO Mike Sommers said, “Rather than crediting price declines and shifting the blame for price increases, the Biden administration should work seriously to address the supply-demand imbalance that has caused higher gas prices and created long-term.” challenges in the energy sector.”

“Oil companies don’t set prices – global commodity markets do. Rising taxes on American energy are discouraging investment in new production, which is just the opposite of what is needed.”

By Tsvetana Paraskova for Oilprice.com

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