(Bloomberg) – Exxon Mobil Corp. fell nearly 4% after signaling investors would not receive any additional rewards from the oil giant’s record $59 billion annual profit.
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Exxon’s full-year profit, excluding one-time items, jumped 157% from 2021 to $59.1 billion, outstripping the driller’s previous record of $45.2 billion in 2018. 2008, at the time marked the largest in American corporate history.
But investors looking past the top numbers were disappointed that the company didn’t announce plans to move more of that surprise amount into additional share buybacks. Shares fell nearly 4% in pre-market trading in the United States.
Exxon’s results Tuesday followed those of U.S. rival Chevron Corp., which posted surprise earnings last week just days after it announced a massive $75 share buyback program. billion dollars.
Five so-called super companies are cashing in on record 2022 but pressure is mounting on executive teams to meet competing demands: investor appetite for payouts and purchases greater than the political outrage at the bounty in times of war and economic turmoil.
Chevron has come under fire from the White House and Democrats in Congress when it revealed last week plans to funnel $75 billion to investors in the form of stock buybacks.
Exxon expanded its buyback operations multiple times last year and has signaled its intention to buy back $50 billion of stock through 2024. Chief Executive Officer Darren Woods is likely to be probed on whether Exxon can speed up acquisitions again when he holds a conference call with analysts at 8:30 a.m. New York time.
There are also signs that Wall Street, after a long hiatus, is once again interested in oil operators increasing crude output. Chevron executives faced many questions about growth plans last week, and some analysts noted their disappointment in the outlook for steady 3% growth this year. of a California-based company. Cowen & Co. said in a note to clients that Chevron’s Permian Basin year-over-year growth rate dropping to 10% would likely be an “overhang” for the stock.
That said, Exxon has less reason to worry about growth than some of its peers. Goldman Sachs wrote in a Jan. 20 note that the company has a “distinct upstream project queue” that will help boost returns on capital in the years to come.
On a quarterly basis, Exxon beat expectations for the ninth time in 10 periods, posting adjusted fourth-quarter profit of $3.40 a share, 10 cents above analysts’ average estimate. analysis in the Bloomberg Consensus.
The Texas oil giant has continued to invest in major projects in Guyana and the Permian region during the pandemic that, in Exxon’s own estimates, will have a production boost to the same level. more than 4 million barrels per day by 2027, an increase of about 8% from current levels.
Alongside fossil fuel growth, Exxon plans to ramp up spending on clean energy investments by focusing on carbon, hydrogen and biofuel capture. The company cited the Biden administration’s Inflation Reduction Act as a key policy pillar helping to improve the profitability of existing decarbonization operations, but also said that more government support is needed. government for large projects, such as the proposed capture of emissions from industrial facilities along the Houston Ship Channel.
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