Exxon and Chevron to spend billions on new oil fields
2022.12.08 13:11
Exxon and Chevron to spend billions on new oil fields
Budrigannews.com – The two largest oil companies in the United States, Exxon Mobil Corp. (NYSE:) and Chevron Corporation revealed plans to increase expenditures on energy projects next year in light of rising oil prices and demand.
Even though they will spend more, it will still be less than half of the $84 billion they spent all together in 2013, when oil prices frequently exceeded $100 per barrel, as they have this year. Due to those prices and previous cost reductions, the two have significantly increased shareholder payouts.
The focus on shareholder returns has resulted in White House pressure. Oil companies have been criticized by the Biden administration for not increasing oil production to lower consumer prices. Despite this, the budgets for the upcoming year will remain within the ranges that were each established prior to the war in Ukraine, which contributed to a global energy shortage.
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From the anticipated $22 billion this year, Exxon stated that it would increase project investments to between $23 billion and $25 billion next year. Chevron stated that it intends to spend $17 billion, an increase from approximately $15 billion this year. New funds for projects to reduce emissions and the impact of inflation are among the increases.
Production will not increase immediately as a result of the increased spending. Exxon has said it anticipates that result one year from now should be level at around 3.7 million barrels of identical oil each day (boed), while Chevron has figure a more noteworthy than 3% compound normal yearly increment through 2026.
According to Darren Woods, Chief Executive Officer of Exxon, the company will fall short of its goal of pumping 1 million boed from its Permian operations by approximately two years. In 2027, it intends to reach between 900,000 and 1 million boed.
The amount of money earned will be the most significant change. Assuming global oil prices of $60 per barrel, Exxon anticipates $100 billion in cash surplus by 2027. According to Jefferies equity research, Chevron should generate about $34 billion in free cash flow next year, which is twice as much as it invested in oil.
Lloyd Byrne and Sam Burwell, equity analysts at Jefferies, stated, “This leaves ample room for opportunistic M&A, increases to the buyback, or simply even lower leverage with an eye toward increasing buybacks at a lower share price.”
Producers in the United States and Europe have also been partially recouping project spending that was cut during the pandemic. (LON:) Shell Capital expenditures rose 22% this year to between $23 billion and $27 billion. (NYSE:) BP Project spending increased this year by 21% to $15.5 billion from last year.
This year, the five Western majors made record profits, and this quarter, the shares of Exxon and Chevron have reached all-time highs.
