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Rising earnings are still difficult to prevent capital from fleeing
In the second quarter of this year, due to the rise in prices of commodities including oil, the profits of global oil giants hit the highest level since the outbreak of the new crown pneumonia epidemic
.
Although the cash flow performance of oil giants has greatly improved, these companies still intend to continue to retrench expenditures in terms of capacity expansion, and use their precious cash to satisfy investors to meet future development needs
Significantly improved profitability
Significant improvement in earnings Significant improvement in earningsIn the second quarter, the profitability of many Western oil giants has greatly improved
.
On July 30, Exxon Mobil reported a profit of US$4.
This year, with the reopening of various economies, the oil and gas industry has emerged from the shadow of unprecedented losses in 2020
.
Oil prices have also soared to their highest level in two years
Firm oil and gas reduction strategy
Resolute Oil and Gas Reduction Strategy Resolute Oil and Gas Reduction StrategyDespite the sharp increase in profits, none of the Western oil giants said they would increase capital expenditures
.
This is because investors are asking Western oil giants to slow down growth and clean up carbon emissions due to concerns about regulatory tightening and climate change
So far, Exxon Mobil has insisted on cutting expenses
.
Exxon Mobil last year cut its annual capital budget from $25 billion to $19 billion
Energy data analysis company Enverus analyst Andrew McConn said that since March last year, ExxonMobil's number of drilling rigs in the Permian Basin has decreased by about 85% to less than 10
.
He also pointed out that Chevron has also made similar cuts, and neither company has increased the number of drilling rigs in recent months
Prioritize investor returns
Prioritize increasing investor returns prioritizing improving investor returns In the eyes of investors, oil giants’ spending restrictions are a prelude
.
Previously, investors fled the oil and gas industry because of the poor return of oil giants for 10 years and the worrying mid- to long-term prospects surrounding the future of fossil fuels
Chevron Chief Financial Officer Pierre Breber said that many investors still question the commitment of oil producers to abide by capital discipline, especially in the face of rising commodity prices
.
In order to attract investors to come back, Chevron prioritizes the use of funds to increase shareholder return on investment
European companies have a similar situation
.
On August 3, BP announced a dividend of 5.
46 cents per share for the second quarter, higher than the 5.
25 cents in the first quarter, and initiated a $1.
4 billion share repurchase
.
The British oil and gas giant said that the increase in dividends is based on the basic performance of the business, improved environmental prospects and confidence in its financial condition
.
