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ENB Pub Note: This article by Charles Kennedy for Oilprice.com makes some excellent points. I still feel that energy, Utility, critical minerals, oil, and gas are still good investments. There are some great deals available, and I have conducted several insightful interviews with CEOs discussing the benefits of investing in energy commodities. Wind, solar, and hydrogen companies have not generated significant returns, as they are heavily reliant on subsidies and tax credits. In contrast, other markets can deliver long-term profits to their shareholders, driven by the open market. Warren Buffett was right in 2014 when he said there is no reason to invest or build a wind farm unless you get the tax credits and subsidies. The ESG markets have had a positive impact on Exploration and Production companies in the United States through new commitments over the last decade to return investor shareholder value through dividends or stock buybacks.
We are currently achieving approximately 35% returns on our oil and gas investments, and you must consider the well economics before drilling. If you are worried about a price swing in oil and gas on a daily basis, the well might not be a good investment.
I still believe that we will see oil prices rise, and as we navigate the next 60 days of tariff redefinition and trade agreement updates, the world will be a better place for investing and expecting shareholder returns.
- Analysts anticipate some Big Oil companies may announce reduced share buyback programs.
- Investors are focused on how companies will address the recent drop in oil prices.
- Companies are reporting Q1 earnings this week, with attention on future financial plans.
Analysts are not ruling out the possibility that some oil and gas supermajors could announce as soon as this week reduced share buyback programs for this year compared to the guidance from early 2025, before the oil price slide.
Investors will be more focused to learn how Big Oil plans to cope with the 12% decline in oil prices so far this year and whether the dividend and share repurchases still stand as pledged at the Q4 earnings calls, than on the exact number of billions of U.S. dollars the firms made in the first quarter, analysts at investment banks have told Reuters.
This week, most Big Oil firms report first-quarter earnings, starting with BP on Tuesday and finishing with Exxon, Chevron, and Shell on Friday.
Some of these have previewed part of the factors likely to have affected their Q1 earnings.
Shell sees LNG liquefaction volumes down in the first quarter. But Shell’s Trading and optimization in the Chemicals and Products division is expected to be significantly higher than in Q4 and be in line with Q2 2024 and Q3 2024 contributions on the back of a higher refining margin and increased refinery and chemicals plant utilization.
U.S. supermajor ExxonMobil, for its part, expects its first-quarter earnings to be higher than in Q4 by up to $2 billion, thanks to higher oil and gas prices and rising refining margins.
More than on Q1 results, investors and analysts will be focused on the buyback guidance.
Chevron may reduce planned repurchases to the lower end of its guidance and BP could also be forced to trim the pace of buybacks, analysts briefed by Reuters expect.
Some could also find other ways to reduce the pressure of the lower oil prices. Italy’s Eni, for example, reduced last week its capital expenditure plans for 2025 and vowed to cut more costs, but it maintained the planned shareholder distributions such as dividend and buybacks.
By Charles Kennedy for Oilprice.com
The post Big Oil Could Trim Buybacks After Price Rout – But Oil and Gas is still a good investment appeared first on Energy News Beat.
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