Big Oil offers record returns to lure investors back

By Ron Busso

LONDON (Reuters) – Big oil companies are handing out more money to shareholders than ever before and promising more in an effort to reassure investors about their discipline and flexibility in the face of an uncertain outlook for the fossil fuel.

The top five Western oil and gas companies – BP, Chevron, Exxon Mobil, Shell and TotalEnergies – returned more than $111 billion to shareholders in 2023 in the form of dividends and share buybacks, according to Reuters calculations.

That was slightly more than the $110 billion returned in 2022, when the group’s profits rose to a record $196 billion after energy prices rose following Russia’s invasion of Ukraine. Net profits fall sharply to $123 billion in 2023. All five companies reported results last week.

“At a time of geopolitical turmoil and economic uncertainty, our purpose remains the same: safely delivering high returns and low carbon,” Chevron CEO Mike Wirth told investors last Friday.

Investors such as pension funds traditionally hold shares of big oil companies because of their stable, long-term dividends.

But interest in the sector has declined due to the rise of the tech sector, overspending over the past decade and a sharp decline in the performance of oil majors due to oil price volatility, as well as growing environmental concerns.

The energy sector accounted for 4.4% of the S&P 500 index’s total weighting at the end of January, up from about 14% in the previous decade, according to S&P data.

perfect predictability

The group has revealed a clear transatlantic divide in strategies in recent years, with Chevron and Exxon focusing on increasing oil production, while BP, TotalEnergies and Shell invest a higher proportion of capital in low-carbon and renewable energy. .

But the message to investors…

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