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Exxon and Chevron after profit explosion, oil majors bet on takeovers | Business section

(Reuters) — The two biggest U.S. oil companies, Exxon Mobil Corp and Chevron Corp, posted record revenues on Friday, buoyed by soaring crude oil and natural gas prices and after similar results for European majors a day earlier.

The American pair, along with British-based Shell and French-based TotalEnergies, combined to earn nearly $51 billion in the last quarter, nearly double what the group reported a year ago.

Exxon edged out rivals with a quarterly profit of $17.9 billion, the highest of any major international oil company in history.

Chevron, Shell and Total raced to catch up with Exxon’s aggressive buyout program, which remained unchanged.

The four returned a total of $23 billion to shareholders during the quarter, capitalizing on high margins from the sale of oil and gas. The fifth major, BP Plc, reports next week.

Companies posted strong results at their production units, helped by a surge in benchmark Brent crude oil futures, which averaged around $114 a barrel in the quarter.

High crude oil prices can reduce the margins of integrated oil majors, as they also bear the cost of crude used for refined products. However, following Russia’s invasion of Ukraine and numerous refinery shutdowns around the world as a result of the coronavirus pandemic, refining margins exploded in the second quarter, outpacing crude and increasing profits.

“The strong second quarter results reflect a tight global market environment, where demand has returned to near pre-pandemic levels and supply has declined,” said Exxon Chief Executive Darren Woods, in a call with analysts. “The growing supply will not happen overnight.”

The majors’ results are sure to draw fire from politicians and consumer advocates who say oil companies are taking advantage of a global supply shortage to fatten profits and gouge consumers. Last month, President Joe Biden said Exxon and others were making “more money than God” at a time when consumer fuel prices hit record highs.

Earlier this month, Britain passed a one-off 25% tax on North Sea oil and gas producers. US lawmakers have been discussing a similar idea, even though it faces long chances in Congress.

A windfall tax does not provide “the incentive to increase production, which the world really needs today,” Kathryn Mikells, Exxon’s chief financial officer, said in an interview with Reuters.

The companies say they are just responding to consumer demand and prices are a function of global supply issues and lack of investment. The majors have been disciplined with their capital and are resisting increased capital spending due to pressure from investors who want better returns and resilience during a down cycle.

“Short term (oil cash) goes to the balance sheet. There’s nowhere to go,” Chevron chief financial officer Pierre Breber told Reuters.

Global oil production has been held back by a slow return to the market for barrels from the Organization of the Petroleum Exporting Countries and its allies, including Russia, as well as labor and capital shortages. equipment that hinder a faster increase in supply in places like the United States.

Exxon earlier this year more than doubled its planned buyback program to $30 billion through 2022 and 2023. Shell said it would buy back $6 billion of stock in the current quarter, while Chevron boosted its annual buyout plans to a range of $10 billion to $15 billion. , from $5 billion to $10 billion.

Exxon shares rose 4.6% to $96.93. Shares of Chevron rose nearly 9%, closing at $163.78.