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With WTI at over $107 per barrel, and Brent at $111, energy stocks are setting record highs and buybacks are in the air.
Bloomberg reports that a minimum of 21 major North American energy companies engaged in stock buybacks in Q4 2021, and that buybacks continue to gain significant momentum as Russia’s invasion of Ukraine escalates.
In total, analysts expected big oil to conclude $38 billion in share buybacks this year, and possibly more, with all seven oil supermajors pursuing the return to shareholders based on bumper profits.
That would be more than at any time since 2008.
The momentum started even before the Russian invasion of Ukraine, with Devon Energy a prime example. Devon’s Q4 2021 earnings report on February 15th showed a complete reversal from a $2.5-billion loss in 2020 to a $2.8-billion profit in 2021. That led to a 45% dividend raise and some $600 million in buybacks, compared to only $38 million in buybacks for 2021, CNBC reports.
Earlier this month, Chevron said it would increase buybacks, with a plan to buyback between $5 and $10 billion in stock per year, up from a range of $3-$5 billion previously.
Most recently, Occidental Petroleum announced a $3-billion buyback earlier this month.
American oil and gas companies have been refraining from ramping up production; instead, opting to return cash to shareholders, with U.S. Energy Secretary Jennifer Granholm saying on Wednesday that, “In this moment of crisis we need more supply. Right now we need oil and gas production to rise to meet current demand."
“Capital discipline today for oil companies is basically no [production] growth,” Occidental Petroleum Chief Executive Vicki Hollub noted at a Houston conference on Wednesday.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com