Released February 08, 2023 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Four large integrated supermajor oil companies--Exxon Mobil Corporation (NYSE:XOM) (Irving, Texas), Chevron Corporation (NYSE:CVX) (San Ramon, California), Shell plc (NYSE:SHEL) (London, England) and BP Plc (NYSE:BP) (London, England) (London, England)--reported historic profits for 2022 amid high crude prices, strong demand, and streamlined organizations that sliced operating costs.
The combined full-year 2022 profit for those four companies was about $161.2 billion, compared with $71.5 billion in 2021. In the fourth quarter alone, profits surged to approximately $34.4 billion, up from $29.6 billion in the comparable year-earlier period.
Click on the images at right to see fourth-quarter and full-year 2022 earnings of ExxonMobil, Chevron, Shell and BP.
Shareholders, not customers, will continue to be the primary beneficiaries of gushing profits as companies continued their recent practice of using a large share of their cash haul to boost stock dividends and buy back shares. Democratic politicians denounced the high earnings as "war profiteering" and threatened a windfall profit tax, but a GOP majority in the U.S. House of Representatives made that unlikely.
In their quarterly earnings calls, chief executive officers at these four integrated oil supermajors emphasized their investments in low-carbon businesses as they extolled increased operational efficiencies and "capital discipline" in their bread-and-butter oil & gas business. Investors reacted tepidly to the earnings reports of ExxonMobil, Chevron and Shell: share prices fell in tandem with softening crude oil prices in the days after the fourth-quarter earnings announcements. But investors pushed up BP's shares the day it reported earnings.
ExxonMobil
Chairman and Chief Executive Darren Woods acknowledged that the company's record financial performance "benefited from a favorable (oil) market" in 2022, but one reason the company did so well last year was it invested counter-cyclically, prior to the COVID-19 pandemic, when oil prices were low: "We leaned in when others leaned out, bucking conventional wisdom. We continued with these investments through the pandemic and into today."
ExxonMobil earned more in 2022 despite having lower revenue than its previous record year, 2012, because it improved profit margins by 400 basis points (four percentage points), which "reflected upgrades to our product mix, structural cost reductions and disciplined expense management," Woods told investors. He added that further cost reductions were possible in supply chain, procurement and finance.
He also detailed early successes in ExxonMobil's low-carbon solutions business as well as plans to expand that business. The company recently signed a customer contract to capture and permanently store up to 2 million metric tons per year of carbon dioxide (CO2). "This agreement, in a hard-to-decarbonize sector, highlights how ExxonMobil can leverage our advantages to help others reduce their emissions and build an attractive business with strong returns and significant opportunities for growth."
He added that the recent enactment of the U.S. Inflation Reduction Act (IRA), which incentivizes both hydrogen and carbon capture and storage, caused ExxonMobil to boost investment plans in lower-emission opportunities to $17 billion from 2022 through 2027, up from $15 billion in its prior plan.
In the fourth quarter, Exxon earned $12.8 billion, up from $8.9 billion in the comparable year-earlier quarter. For the full year, the company earned $55.7 billion, more than double the $23 billion it earned in 2021.
The company recently completed a 250,000-barrel-per-day expansion of its Beaumont Refinery in Texas; the new capacity will begin operating in the first quarter, the ExxonMobil chief executive officer said.
ExxonMobil, along with its partners and subsidiaries, is involved with about 210 capital projects around the world collectively valued at approximately $104.3 billion, according to IIR's Global Market Intelligence platform. About 139 of these capital projects, with total investment value (TIV) of approximately $81.4 billion, are in Oil & Gas Production. Other industries expected to draw ExxonMobil's investment dollars are: Chemical Processing (20 projects, $12.5 billion of TIV); Electric Power (4 projects, TIV of $6.7 billion); and Refining (15 projects, TIV of $1.4 billion).
By world region, ExxonMobil is involved in planned investments in Asia ($54.5 billion), North America ($28 billion) and Oceania ($16.3 billion).
Chevron
Before announcing its earnings on January 27, Chevron increased its dividend 6% and committed to $75 billion in stock buybacks.
Fourth-quarter earnings increased to $6.4 billion compared to comparable year-earlier profits of $5.1 billion. For all of 2022, the company earned $35.5 billion, a record and more than twice its 2021 earnings of $15.6 billion. Nearly all of its profits came from exploration & production of crude oil and natural gas.
The company produced about 1.1 billion barrels of oil equivalent (BOE) last year, and added 1.1 billion BOE of new reserves for a 100% reserves replacement ratio. At yearend 2022, Chevron had 11.2 billion BOE of reserves.
If Brent crude oil sells for an average of $80 per barrel this year, the company expects 2023 production to be flat to up 3% from 2022 production, projected Mike Wirth, chairman and chief executive. Production in the Permian is expected to lead production gains. The company is trying to sell its assets in the Eagle Ford Shale.
He commented, "Chevron had an outstanding year in 2022--delivering record financial performance, producing more traditional energy and advancing lower carbon businesses. U.S. production was also our highest ever, led by double-digit growth in the Permian. Growth matters when it's profitable. Return on capital employed (exceeded) 20%, (which) shows that our focus on capital efficiency is delivering results."
He continued: "Going forward with the new (stock buyback) program, our intent is the same: be a steady buyer of our shares across commodity cycles. With a breakeven Brent price around $50 per barrel to cover our capex and dividend, and with excess balance sheet capacity, we're positioned to return more cash to shareholders in any reasonable oil price scenario."
Chevron, along with its partners and subsidiaries, are involved in an estimated 173 capital projects around the world, according to IIR's Global Market Intelligence platform. The value of these planned projects is about $82.1 billion. Most of this planned investment, about $60.4 billion, is expected to go to Oil & Gas Production. Roughly $15.2 billion is slated to be invested in the Chemical Processing Industry. Geographically, most of the planned spending will be made in Asia ($45.8 billion) followed by North America ($30.5 billion).
Shell
In his first earnings call as Shell's chief executive, Wael Sawan on February 2 emphasized the importance of a "balanced energy transition," one that did not dismantle the current energy system before the new, net-zero emissions system, was ready.
"The world requires a secure supply of affordable energy, and at the same time, needs this energy to be increasingly low-carbon to make the transition to a net-zero emissions energy system," he said, adding that 2022 provided evidence that the world was moving from "ambition to action" as shown by the enactment of the IRA in the U.S. and the "Fit for 55" initiative in Europe.
"Despite this progress," he continued, "the energy system still faces huge challenges, and it continues to need bold decisive actions by companies, governments and society at large. This transition will not be linear and will play out with different solutions needed at different times in different places across the world."
The company reported profits of $10.4 billion for the fourth quarter, down from earnings of $11.4 billion in 2021's fourth quarter. But full-year 2022 profits soared to $42.3 billion, more than doubling full-year 2021 earnings.
The company also increased the common stock dividend 15% and announced a $4 billion stock buyback program.
Wael commented, "We aim to deliver the oil and gas that the world sorely needs today while also leveraging our unparalleled customer reach to develop the scalable and profitable low-carbon products that are urgently needed."
Shell, along with its partners and subsidiaries, are involved in an estimated 557 capital projects around the world worth an estimated $133.5 billion, according to IIR's Global Market Intelligence platform. Geographically, Asia is scheduled to receive the lion's share of future investment, totaling about $57.8 billion, followed by Europe ($33 billion), North America ($17.5 billion) and Africa ($12.7 billion). By industry, Oil & Gas Production is slated to garner about $80.5 billion of capital investment, while smaller slices will go to Power ($27 billion), Chemical Processing ($14.4 billion) and Metals & Minerals ($4 billion).
BP
Like its brethren Big Oil peers, BP's full-year 2022 profit more than doubled, to $27.7 billion from $12.8 billion in 2021. Fourth-quarter earnings were more muted: $4.8 billion compared with $4.1 billion in the year-earlier period.
In its earnings call on February 7, the company said it would increase its dividend by 10% and added another $2.75 billion to its share repurchase program.
The London-based supermajor, along with its partners and subsidiaries, are involved with an estimated 274 projects around the world valued at about $53.75 billion, according to IIR's Global Market Intelligence platform. By industry, most of that planned capital investment--about $38.2 billion--is scheduled to go to Oil & Gas Production. Far smaller amounts are expected to be invested in Power ($7 billion), Chemical Processing ($4.5 billion) and Oil & Gas Pipelines ($2.6 billion). Geographically, about $17.5 billion of these planned outlays will go to North America, followed by $10.9 billion in Asia and $10.2 billion in Africa.
Speaking on the earnings call, BP Chief Executive Officer Bernard Looney said the supermajor would increase its investments in transition growth engines by up to $8 billion by 2030. He identified a few specific transition-related businesses: "higher-return bioenergy, and convenience and EV charging; focusing hydrogen and renewables & power where bp can leverage integration."
Looney also pledged to boost capital investment by a similar $8 billion in oil and gas to 2030. He said the firm was "targeting short-cycle fast-payback opportunities with lower additional operational emissions."
He termed this two-track strategy as "investing more in the energy transition and BP's transition, investing more in supporting energy security and energy affordability today."
"It's clearer than ever after the past three years that the world wants and needs energy that is secure and affordable as well as lower carbon--all three together, what's known as the energy trilemma," Looney said. "To tackle that, action is needed to accelerate the transition. And--at the same time--action is needed to make sure that the transition is orderly, so that affordable energy keeps flowing where it's needed today."
BP now aims to accelerate the growth in earnings from its transition energy businesses while also delivering higher earnings than previously expected from its oil and gas businesses through 2030.
The company plans to achieve higher earnings from its traditional and non-traditional energy businesses by "disciplined increases" in its overall capital expenditures, to a targeted range of $14 billion to $18 billion per year to 2030, up from the previous range of $14 billion to $16 billion. Higher capex is expected to deliver around $3 billion of additional earnings before taxes, interest, depreciation and amortization (EBITDA) in 2025 and up to $5 billion to $6 billion in 2030. The 2030 forecast would reflect an additional $2 billion in incremental profit from its transition businesses and an extra $3 billion to $4 billion from its traditional oil and gas ventures.
Looney commented: "Throughout 2022, BP continued to focus on delivery of our integrated energy company strategy. We are helping provide the energy the world needs today and, at the same time, investing with discipline into our transition and the energy transition, as demonstrated by the Archaea Energy acquisition. We are strengthening BP, with our strongest upstream plant reliability on record and our lowest production costs in 16 years, helping to generate strong returns and reducing debt for the 11th quarter in a row. Importantly, we are delivering for our shareholders--with buybacks and a growing dividend. This is exactly what we said we would do and will continue to do--performing while transforming."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
The combined full-year 2022 profit for those four companies was about $161.2 billion, compared with $71.5 billion in 2021. In the fourth quarter alone, profits surged to approximately $34.4 billion, up from $29.6 billion in the comparable year-earlier period.
Shareholders, not customers, will continue to be the primary beneficiaries of gushing profits as companies continued their recent practice of using a large share of their cash haul to boost stock dividends and buy back shares. Democratic politicians denounced the high earnings as "war profiteering" and threatened a windfall profit tax, but a GOP majority in the U.S. House of Representatives made that unlikely.
In their quarterly earnings calls, chief executive officers at these four integrated oil supermajors emphasized their investments in low-carbon businesses as they extolled increased operational efficiencies and "capital discipline" in their bread-and-butter oil & gas business. Investors reacted tepidly to the earnings reports of ExxonMobil, Chevron and Shell: share prices fell in tandem with softening crude oil prices in the days after the fourth-quarter earnings announcements. But investors pushed up BP's shares the day it reported earnings.
ExxonMobil
Chairman and Chief Executive Darren Woods acknowledged that the company's record financial performance "benefited from a favorable (oil) market" in 2022, but one reason the company did so well last year was it invested counter-cyclically, prior to the COVID-19 pandemic, when oil prices were low: "We leaned in when others leaned out, bucking conventional wisdom. We continued with these investments through the pandemic and into today."
ExxonMobil earned more in 2022 despite having lower revenue than its previous record year, 2012, because it improved profit margins by 400 basis points (four percentage points), which "reflected upgrades to our product mix, structural cost reductions and disciplined expense management," Woods told investors. He added that further cost reductions were possible in supply chain, procurement and finance.
He also detailed early successes in ExxonMobil's low-carbon solutions business as well as plans to expand that business. The company recently signed a customer contract to capture and permanently store up to 2 million metric tons per year of carbon dioxide (CO2). "This agreement, in a hard-to-decarbonize sector, highlights how ExxonMobil can leverage our advantages to help others reduce their emissions and build an attractive business with strong returns and significant opportunities for growth."
He added that the recent enactment of the U.S. Inflation Reduction Act (IRA), which incentivizes both hydrogen and carbon capture and storage, caused ExxonMobil to boost investment plans in lower-emission opportunities to $17 billion from 2022 through 2027, up from $15 billion in its prior plan.
In the fourth quarter, Exxon earned $12.8 billion, up from $8.9 billion in the comparable year-earlier quarter. For the full year, the company earned $55.7 billion, more than double the $23 billion it earned in 2021.
The company recently completed a 250,000-barrel-per-day expansion of its Beaumont Refinery in Texas; the new capacity will begin operating in the first quarter, the ExxonMobil chief executive officer said.
ExxonMobil, along with its partners and subsidiaries, is involved with about 210 capital projects around the world collectively valued at approximately $104.3 billion, according to IIR's Global Market Intelligence platform. About 139 of these capital projects, with total investment value (TIV) of approximately $81.4 billion, are in Oil & Gas Production. Other industries expected to draw ExxonMobil's investment dollars are: Chemical Processing (20 projects, $12.5 billion of TIV); Electric Power (4 projects, TIV of $6.7 billion); and Refining (15 projects, TIV of $1.4 billion).
By world region, ExxonMobil is involved in planned investments in Asia ($54.5 billion), North America ($28 billion) and Oceania ($16.3 billion).
Chevron
Before announcing its earnings on January 27, Chevron increased its dividend 6% and committed to $75 billion in stock buybacks.
Fourth-quarter earnings increased to $6.4 billion compared to comparable year-earlier profits of $5.1 billion. For all of 2022, the company earned $35.5 billion, a record and more than twice its 2021 earnings of $15.6 billion. Nearly all of its profits came from exploration & production of crude oil and natural gas.
The company produced about 1.1 billion barrels of oil equivalent (BOE) last year, and added 1.1 billion BOE of new reserves for a 100% reserves replacement ratio. At yearend 2022, Chevron had 11.2 billion BOE of reserves.
If Brent crude oil sells for an average of $80 per barrel this year, the company expects 2023 production to be flat to up 3% from 2022 production, projected Mike Wirth, chairman and chief executive. Production in the Permian is expected to lead production gains. The company is trying to sell its assets in the Eagle Ford Shale.
He commented, "Chevron had an outstanding year in 2022--delivering record financial performance, producing more traditional energy and advancing lower carbon businesses. U.S. production was also our highest ever, led by double-digit growth in the Permian. Growth matters when it's profitable. Return on capital employed (exceeded) 20%, (which) shows that our focus on capital efficiency is delivering results."
He continued: "Going forward with the new (stock buyback) program, our intent is the same: be a steady buyer of our shares across commodity cycles. With a breakeven Brent price around $50 per barrel to cover our capex and dividend, and with excess balance sheet capacity, we're positioned to return more cash to shareholders in any reasonable oil price scenario."
Chevron, along with its partners and subsidiaries, are involved in an estimated 173 capital projects around the world, according to IIR's Global Market Intelligence platform. The value of these planned projects is about $82.1 billion. Most of this planned investment, about $60.4 billion, is expected to go to Oil & Gas Production. Roughly $15.2 billion is slated to be invested in the Chemical Processing Industry. Geographically, most of the planned spending will be made in Asia ($45.8 billion) followed by North America ($30.5 billion).
Shell
In his first earnings call as Shell's chief executive, Wael Sawan on February 2 emphasized the importance of a "balanced energy transition," one that did not dismantle the current energy system before the new, net-zero emissions system, was ready.
"The world requires a secure supply of affordable energy, and at the same time, needs this energy to be increasingly low-carbon to make the transition to a net-zero emissions energy system," he said, adding that 2022 provided evidence that the world was moving from "ambition to action" as shown by the enactment of the IRA in the U.S. and the "Fit for 55" initiative in Europe.
"Despite this progress," he continued, "the energy system still faces huge challenges, and it continues to need bold decisive actions by companies, governments and society at large. This transition will not be linear and will play out with different solutions needed at different times in different places across the world."
The company reported profits of $10.4 billion for the fourth quarter, down from earnings of $11.4 billion in 2021's fourth quarter. But full-year 2022 profits soared to $42.3 billion, more than doubling full-year 2021 earnings.
The company also increased the common stock dividend 15% and announced a $4 billion stock buyback program.
Wael commented, "We aim to deliver the oil and gas that the world sorely needs today while also leveraging our unparalleled customer reach to develop the scalable and profitable low-carbon products that are urgently needed."
Shell, along with its partners and subsidiaries, are involved in an estimated 557 capital projects around the world worth an estimated $133.5 billion, according to IIR's Global Market Intelligence platform. Geographically, Asia is scheduled to receive the lion's share of future investment, totaling about $57.8 billion, followed by Europe ($33 billion), North America ($17.5 billion) and Africa ($12.7 billion). By industry, Oil & Gas Production is slated to garner about $80.5 billion of capital investment, while smaller slices will go to Power ($27 billion), Chemical Processing ($14.4 billion) and Metals & Minerals ($4 billion).
BP
Like its brethren Big Oil peers, BP's full-year 2022 profit more than doubled, to $27.7 billion from $12.8 billion in 2021. Fourth-quarter earnings were more muted: $4.8 billion compared with $4.1 billion in the year-earlier period.
In its earnings call on February 7, the company said it would increase its dividend by 10% and added another $2.75 billion to its share repurchase program.
The London-based supermajor, along with its partners and subsidiaries, are involved with an estimated 274 projects around the world valued at about $53.75 billion, according to IIR's Global Market Intelligence platform. By industry, most of that planned capital investment--about $38.2 billion--is scheduled to go to Oil & Gas Production. Far smaller amounts are expected to be invested in Power ($7 billion), Chemical Processing ($4.5 billion) and Oil & Gas Pipelines ($2.6 billion). Geographically, about $17.5 billion of these planned outlays will go to North America, followed by $10.9 billion in Asia and $10.2 billion in Africa.
Speaking on the earnings call, BP Chief Executive Officer Bernard Looney said the supermajor would increase its investments in transition growth engines by up to $8 billion by 2030. He identified a few specific transition-related businesses: "higher-return bioenergy, and convenience and EV charging; focusing hydrogen and renewables & power where bp can leverage integration."
Looney also pledged to boost capital investment by a similar $8 billion in oil and gas to 2030. He said the firm was "targeting short-cycle fast-payback opportunities with lower additional operational emissions."
He termed this two-track strategy as "investing more in the energy transition and BP's transition, investing more in supporting energy security and energy affordability today."
"It's clearer than ever after the past three years that the world wants and needs energy that is secure and affordable as well as lower carbon--all three together, what's known as the energy trilemma," Looney said. "To tackle that, action is needed to accelerate the transition. And--at the same time--action is needed to make sure that the transition is orderly, so that affordable energy keeps flowing where it's needed today."
BP now aims to accelerate the growth in earnings from its transition energy businesses while also delivering higher earnings than previously expected from its oil and gas businesses through 2030.
The company plans to achieve higher earnings from its traditional and non-traditional energy businesses by "disciplined increases" in its overall capital expenditures, to a targeted range of $14 billion to $18 billion per year to 2030, up from the previous range of $14 billion to $16 billion. Higher capex is expected to deliver around $3 billion of additional earnings before taxes, interest, depreciation and amortization (EBITDA) in 2025 and up to $5 billion to $6 billion in 2030. The 2030 forecast would reflect an additional $2 billion in incremental profit from its transition businesses and an extra $3 billion to $4 billion from its traditional oil and gas ventures.
Looney commented: "Throughout 2022, BP continued to focus on delivery of our integrated energy company strategy. We are helping provide the energy the world needs today and, at the same time, investing with discipline into our transition and the energy transition, as demonstrated by the Archaea Energy acquisition. We are strengthening BP, with our strongest upstream plant reliability on record and our lowest production costs in 16 years, helping to generate strong returns and reducing debt for the 11th quarter in a row. Importantly, we are delivering for our shareholders--with buybacks and a growing dividend. This is exactly what we said we would do and will continue to do--performing while transforming."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
