Big Oil groups regain swagger with largest profits in years

Big Oil groups regain swagger with largest profits in years

Big Oil’s profits are back after a year of humiliating losses, boosting the share prices and a bit of the swagger of US supermajors that have fended off questions over their long-term prospects.

ExxonMobil and Chevronin the past week reported combined net annual profits of nearly $38.6bn in 2021, a huge swing from combined losses of $27.6bn in the first year of the pandemic.

Both companies’ share prices have easily outpaced the broader market over the past year, a sharp turnround after nearly a decade of poor returns when the energy sector was left behind by many investors.

The profits were the highest since 2014, when crude oil prices last traded above $100 a barrel. This time, however, the majors are planning less capital spending on new production than in years past.

Instead, they are heeding investor demands to funnel cash back to shareholders, said Sam Margolin, analyst at Wolfe Research, who said the companies had pursued “self help” during the 2020 downturn.

“Sometimes you need a really big challenge in order to level set how the company should be run,” Margolin said.

Exxon envisages capital spending of between $21bn and $24bn this year — sharply lower than plans to spend between $30bn and $35bn a