Chevron announced a 30% reduction in share buybacks for Q2, lowering the repurchase to $2.75 billion due to declining oil prices, despite strong earnings from low-cost production in Kazakhstan and the Permian Basin. In contrast, ExxonMobil plans to maintain its $5 billion quarterly buyback, and Shell confirmed it can continue repurchasing over $3 billion in shares per quarter even if crude prices fall to $50 per barrel.As Brent crude dropped 17% this year to $62 a barrel, Big Oil is facing challenges in maintaining share buybacks. The ongoing trade war and increased oil supply from OPEC and its allies have added pressure.
BP and Chevron reduced their buybacks, while Exxon, Shell, and TotalEnergies maintained theirs. With rising debt levels, the effectiveness of these strategies remains uncertain, especially if oil prices continue to fall.Brent crude futures fell 0.3% to $61.95 a barrel on Friday. Chevron’s Q1 earnings of $2.18 per share exceeded analyst expectations, as did Shell’s, while Exxon matched estimates. Chevron’s Q2 buyback, between $2.5 billion and $3 billion, remains within its annual guidance but represents a reduction from last year. The company also invested $2.3 billion to purchase 5% of Hess Corp. shares ahead of a planned merger. CFO Eimear Bonner called the buyback program “very strong,” noting it exceeds pre-COVID levels.
Chevron’s debt level remains manageable, with its net debt ratio increasing to 14.4% in Q1, still well below its target range of 20% to 25%. While Chevron can continue returning cash to shareholders, RBC Capital Markets analyst Biraj Borkhataria noted the company’s actions this quarter indicate it’s preparing for potential challenges ahead due to deteriorating market conditions. Chevron’s shares rose up to 2% on Friday.Exxon, the largest investor-owned supermajor, is increasing capital spending this year, planning to launch 10 new projects, including oil developments in Guyana, the Permian Basin, and Brazil, as well as LNG and chemicals in the US and China.
CEO Darren Woods assured shareholders that Exxon is prepared for market uncertainty. Meanwhile, Shell’s focus on cost-cutting, reliability, and shedding underperforming assets positions it better to handle the downturn, unlike BP. Exxon’s shares rose by up to 3%.Shell’s shares rose 4.4% on Friday in London. However, its Q1 cash flow dropped to $9.28 billion from $13.16 billion, and net debt increased to $41.52 billion from $38.81 billion in Q4. The gearing ratio rose from 17.7% to 18.7%. CFO Sinead Gorman stated that Shell is sticking to its plan, despite recognizing that other companies may face more challenges due to weaker positioning.
