Also Bp, the last of the majors to publish the quarterly, has reserved good news for shareholders. The group, having completed a first buyback, resolved unew share buyback (buy-back) for $1,25 billion plus a dividend of 5,46 cents per share for the third quarter, payable in the fourth quarter, unchanged after the 4% increase announced with the second quarter results.
Profit, on the other hand, grew to 3,32 billion, above analysts' expectations and higher than the 2,8 billion in the second quarter. Which allowed CEO Bernard Looney to state that "beyond the increase in oil prices, pay off our strategy: strengthen the financial structure, give more profits to our shareholders, invest in the transformation of our business". Almost a Bible of rules for new oil companies in the time of global warming in which only one commandment seems to apply: do not extract a single drop of oil more.
Put like this it seems like a paradox. But, like all paradoxes, there is some truth. Despite the sharp increase in oil prices (+60% in 2021), according to a study by Raymond James, 50 of the world's leading oil companies raised their annual budget by just 1% to $275 billion from $271. Under pressure from activist shareholders and the “green” orientation of the market, the big Big Oils are reducing the typical search activity of new deposits, thus obeying the invitation of the IEA, the international energy agency which already in the spring had promoted efforts against global warming, to achieve the new objectives. In principle, Europeans focus their efforts on renewables, Americans favor the distribution of profits to shareholders.
The task of supplying the economy with the necessary energy (not only oil, but also liquid gas) is thus unloaded on OPEC cartel countries, enriched by the presence of Russia. But the producing countries, which will meet on Thursday to take stock of the market, are reluctant to obey the American requests for increase the production to avert the risk that high energy prices will cause inflation to explode, frustrating recovery efforts. Forecasts suggest that OPEC +, regardless of the march of prices well above 80 dollars, is moving towards confirmation of the timetable agreed in July to add just 400.000 barrels a day to production from December despite US calls for increases. To justify the caution, underlines Craig Erlan of Oanda, contributes the hypothesis that "next month talks on the Iranian nuclear agreement will resume which could weigh a little on prices, given the prospect that a large quantity of oil will return to the market, but a deal isn't close, so it won't ease current pressures."
But, beyond the geopolitical situation, the energy game is becoming increasingly complex. On the one hand there is the need to fight the rise in temperatureon the other hand, from East to West, there is a world hungry for energy which is asking for derogations even before setting the rules.
In this frame America's Big Oils, also under the pressure of the activist shareholders, have focused on the distribution of profits. Exxon Mobil, after recording $6,8 billion in profit in the third quarter (the best since 2017), launched a $10 billion stock buyback plan, and a symbolic one-cent dividend increase, good to meet tradition, as Exxon has been raising the coupon for 39 years in a row. Not only that "Our free cash flow - said the CEO Darren Woods - will allow us to reduce debts by 4 billion". Same policy for Chevron: 6 billion in profits (the best result since 2013) and 6,7 billion in free cash flow which made it possible to pay dividends for 2,6 billion, cut debts for 5,6 billion and buy back treasury shares for 625 million dollars.
The "European way” stands out for its willingness to accelerate, thanks to the greater resources, in the renewable energy business. It is the case of Total Energy which already from the change of name reflects the desire to expand the scope of activities from fossil energy to new sectors. It is above all the goal of Eni which, after the excellent quarterly performance (+54% to 1,43 billion euro sufficient to finance dividends and paybacks) is preparing to announce the new decarbonisation objectives with the update of the industrial plan at the end of November. Meanwhile, it runs faster than it was announced growth in the renewable energy sector: globally, compared to a year ago, installed capacity now stands at 834 megawatts (it was 307 megawatts), but above all it should rise to 2 gigawatts by the end of the year with projects under construction, such as the purchase announced this morning of 20% of the Dogger Bank project in the UK, the largest offshore wind farm under construction in the world, with a capacity of 3,6 Gigawatts.
Also to follow shell case, the company over which the diktat of the Dutch judiciary incumbent to accelerate its commitment to clean energy, but also the pressure of Daniel Loeb, the shareholder activist of Third Point who is asking for a mix between oil and renewable activities, to be developed with oil-based capital. Even the shell group, meanwhile, has turned over to the shareholders most of the money collected with the sale of the shale oil wells to Conoco Philips, a 9,5 billion deal.
