Latest update February 20th, 2025 12:39 PM
Exxon to spend US$50B buying back shares as cash flow soars over next 5 years
Kaieteur News – US oil major, ExxonMobil is expending a whopping US$50B to buy back its shares as the company projects massive returns from lucrative oil projects over the next five years. With the intention to grow shareholder returns and increase annual dividends, the company increased its original share-repurchase programme by US$20B. It will last through 2024.
In April, Exxon announced that it had tripled its share-buyback programme to as much as $30B after profits surged amid Russia’s invasion of Ukraine and increases in energy prices globally. The announcement came after the company had more than doubled its already adjusted first quarter earnings. The company had set the US$30B buyback to last through next year, 2023.
In their corporate plan for the next five years, the company announced the expansion of its US$30 billion share-repurchase programme, which it said is now up to US$50B through 2024. It also recently increased its annual dividend payment for the 40th consecutive year, a company statement said.
“By year-end 2022, ExxonMobil expects to distribute approximately US$30 billion to shareholders, including $15 billion in dividends and $15 billion in share repurchases.” Apart from the share buyback, Exxon has announced other corporate plans it says it has for strong growth from high-return projects. The company expects to double earnings and cash flow potential by 2027 and will increase investments contributing to lower-emissions efforts.
The company said that its corporate plan through 2027 “maintains annual capital expenditures at $20-$25 billion, while growing lower-emissions investments to approximately $17 billion.”
This disciplined approach, it said, prioritizes high-return, low-cost-of-supply assets in the Upstream and Product Solutions businesses and supports efforts to reduce greenhouse gas emissions. This five-year plan, Exxon’s Chairman and Chief Executive Officer, Darren Woods said, “…is expected to drive leading business outcomes and is a continuation of the path that has delivered industry-leading results in 2022.”
Global oil companies continue to make huge sums of money given the fallout in the energy sector. This is due to high commodity prices as well as the Russia-led Ukraine war where sanctions on the energy powerhouse have seen refusal to use the country’s resources, but at the same time, leaving a huge gap in the global energy market.
Hess Corporation, Exxon Mobil’s partner in Guyana’s lucrative Stabroek Block, along with Chinese partner CNOOC, had also announced its share buyback of some US$650M, for this year alone. International analyst had said that major energy companies were on course to buy back shares “at near-record levels” for this year. It was noted that for 2022 alone, oil companies were set to buy back their stock at around US$38B.
Investopedia online explained that a share repurchase or buyback, is when a publicly traded company purchases its own shares in the marketplace. Along with dividends, share repurchases are a way that a company may return cash to its shareholders. It said that when a company buys back shares, it’s generally a positive sign because it means that the company believes its stock is undervalued and is confident about its future earnings.
Here in Guyana, both Hess and Exxon have praised their Stabroek asset for its contribution to their companies’ portfolios. The more than 11-billion -barrel crude asset is set at several billion US dollars and is covered by a Production Sharing Agreement (PSA) that will allow the oil companies to rake more than they should, industry experts have stated. Several countries have chosen to slap on windfall taxes on the unforeseen excesses enjoyed by the oil companies. Guyana has been advised to do the same, but the People’s Progressive Party administration has refused claiming that it is bound by the rules of the PSA. Oil companies have been accused however, of boosting profits and drawing back money for its shareholders on the backs of the world’s poor. The massive profits have been described as “grotesque”, “obscene” and “record-breaking” among others.
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