Global energy companies to buy back shares at near-record levels for 14 years

Western energy majors are on course to buy back shares at near-record levels this year as soaring oil and gas prices enable them to deliver bumper profits and boost returns for investors, Report informs referring to the Financial Times.

The seven supermajors - including BP, Shell, ExxonMobil and Chevron - are poised to return $38 billion to shareholders through buyback programs this year, according to data from Bernstein Research. Investment bank RBC Capital Markets put the total figure higher, at $41 billion.

That would be almost double the $21 billion in buybacks completed in 2014 - when oil last traded above $100 a barrel - and the biggest total since 2008.

The plans underscored the strength of companies that are reaping the rewards of a resurgence in energy demand as pandemic lockdown restrictions are rolled back.

Gas prices are at record levels and oil is trading at a seven-year high of more than $90 a barrel, resulting in big profits for the supermajor group rounded out by TotalEnergies, Eni and Equinor.

Shell is set to lead the pack in 2022, buying back more than $12 billion of its own shares, according to RBC and Bernstein. At least $8.5 billion of those buybacks will be completed in the first half of the year, Shell said this month, including $5.5 billion from the sale of its assets in the US Permian basin.

Chevron bought back shares worth $1.4 billion in 2021 and has said it will spend $3 billion to $5 billion on buybacks this year.

BP is targeting $4 billion of share buybacks a year, having bought back $3.2 billion of shares last year. Total capital expenditure in its low-carbon energy division was half that in 2021 at $1.6 billion.

Record buybacks totaling $46 billion in 2008 were driven in large part by a huge share purchasing plan at Exxon.

Between 2006 and 2008, Exxon, then the world’s biggest company by market capitalization, bought back about $30 billion of its own shares every year, supported by the divestment of assets following its 1999 merger with Mobil.