Oil Giants Buoyed by High Oil Prices Shower Investors With Cash


Big oil companies are continuing to reap the benefits of high commodity prices but aren’t backing off plans to reward investors while keeping production roughly flat.

Exxon XOM -0.95%

Mobil Corp. said Friday it collected $5.5 billion in first-quarter profit, more than double the same period last year. The US oil giant said it would triple its share repurchases, but will keep oil-field spending at a modest pace.

Chevron Corp.

CLC -1.42%

, the second-largest US oil company after Exxon, on Friday said it made $6.3 billion in quarterly profit, up from about $1.4 billion in the same period last year. The company has paid out billions of dollars to investors so far this year.

France’s TotalEnergies TTE 0.15%

reported $4.9 billion in profit on Thursday, and said it could double its share buybacks this quarter. Other European energy giants, Shell PLC and BP PLC, will post first-quarter results next week and are also expected to report strong profits.

Exxon’s net income was about 38% lower than analysts expected, according to FactSet. It took a $3.4 billion accounting charge after it decided to halt operations at its Sakhalin Island development in Russia’s Far East. Even so, the Texas-based company is planning to boost its $10-billion share-buyback program to $30 billion through 2023, a sign of confidence in its underlying financial health as energy demand rises, Exxon Chief Financial Officer Kathryn Mikells said.

Total took a $4.1 billion accounting charge Wednesday on the value of its natural-gas reserves, citing impacts from the Western sanctions targeting Russia, and decisions by BP and Shell to exit their Russian investments are expected to weigh on their profitability.

Ms. Mikells, who joined Exxon last year as the company’s first CFO, cited the company’s “strong balance sheet and liquidity situation” as reasons it could boost its share repurchase program.

The company’s upstream earnings rose by $1.1 billion from the last quarter as oil and gas prices have surged following Russia’s invasion of Ukraine and as global demand continues to outpace supply growth.

“Especially given today’s context and market environment, we’re working very hard to increase production of low-cost barrels consistent with our overall plan,” Ms. Mikells said, pointing to Exxon’s investments in Guyana, liquefied natural gas and the Permian Basin, the top US oil field, where it is seeking to hike production.

Exxon’s production in the first quarter was down about 4% compared with the prior quarter due to weather and other factors.

Chevron Chief Executive Mike Wirth said his company aims to raise output in the Permian 15% from 2021 levels this year.

“Chevron is doing its part to grow domestic supply,” he said in a news release.

Exxon’s production in the first quarter was down about 4% compared with the prior quarter. An Exxon gas station in Pennsylvania.


Photo:

Rachel Wisniewski for the Wall Street Journal

But both Exxon and Chevron have said their companywide production will be roughly flat from last year’s levels or slightly down. Chevron’s US production was up about 109,000 barrels of oil equivalent a day from the same period last year, while its international production was down 170,000 barrels a day.

Exxon said it spent about $4.9 billion in capital in the first quarter, on pace with its plan to keep investments relatively modest—and far lower than the last time oil prices fetched more than $100 a barrel. The company last year set a conservative budget of $20 billion to $25 billion through 2027, 17% to 33% lower than prepandemic plans.

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Even with oil fetching more than $100 a barrel, and pressure from the Biden administration for oil companies to pump more to help ease high gasoline prices, investors have continued to push companies to remain frugal when it comes to oil-field investments. Instead, shareholders are seeking increases to dividends and buybacks after years of losing money on the sector.

Kevin Holt, senior portfolio manager at Invesco ltd.

said he doesn’t want oil companies to make spending decisions based on current commodity prices, which he said will eventually decline.

“We want to make sure you stay disciplined and look at mid-cycle pricing, in terms of how you’re looking at the world,” said Mr. Holt, referring to oil prices still several years away. “That’s first and foremost.”

As Europe races to wean itself off Russian energy, American natural-gas producers are struggling to meet the demand and prices are rising. Here’s how factors including extreme weather and equipment needs have created a bottleneck amid the war in Ukraine. Illustration: Laura Kammermann and Sharon Shi/WSJ

How the Biggest Companies Are Performing

Write to Collin Eaton at collin.eaton@wsj.com

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