ExxonMobil announces $50 billion buyback despite political backlash

ExxonMobil is expanding its share buyback program to $50 billion and raising capital spending as the US supermajor continues to return huge profits to investors despite the political backlash.

In the new plan announced Thursday, Exxon said it would spend $50 billion over the next three years to buy back its own stock, up from the current $30 billion program that ends in 2023.

Oil industry earnings have soared this year after Russia’s invasion of Ukraine sent a spike in global crude and natural gas prices that producers have used to funnel cash to shareholders after years of disappointing returns.

US President Joe Biden criticized Exxon and other oil companies, saying in October that they “shouldn’t be using their profits to buy back shares or pay dividends. . . while the war is raging”.

But the expanded share buyback program remains focused on Exxon returning revenues from higher energy prices to shareholders, rather than spending on a major new drilling campaign.

The strategy has seen Exxon among the market’s best performers this year, with shares rising more than 60 percent even as the broader S&P 500 fell.

“The results so far show we’re on the right track,” said Exxon CEO Darren Woods.

Exxon will spend $23 billion to $25 billion on energy projects next year, up from $22 billion this year, the company said. Exxon has increased its planned spending on low-carbon projects focused on carbon capture and storage, biofuels and hydrogen to $17 billion through 2027, up from previous guidance of $15 billion.

But the Texas-based oil producer is keeping its annual spending expectations in the range of $20 billion to $25 billion over the next five years, resisting major increases in spending during times of higher oil and gas prices, as the industry has done in the past.

Exxon’s rival Chevron said on Wednesday it would increase spending by 25 percent to about $17 billion next year, including $2 billion for the lower-carbon business.

The spending plans of both companies fall far short of what was indicated before the pandemic, which caused huge financial losses to the companies. In 2019, Exxon said it planned to spend $30 billion to $35 billion a year on its business, while Chevron projected annual spending of about $19 billion to $22 billion.

The bulk of Exxon’s spending is on oil and gas projects in the Permian shale basin in the United States, deepwater projects in Guyana and Brazil, and new liquefied natural gas ventures. The company says it will increase total production by 14 percent from 3.7 million barrels of oil equivalent per day this year to 4.2 million barrels per day by 2027.

But the increased spending comes as oil prices have fallen in recent weeks amid fears that the economic slowdown will reduce global energy demand.

Brent crude traded around $78 a barrel on Thursday, down 20 percent over the past month and roughly where it opened the year, a turnaround after hitting near-record highs over the summer.