Profits – record for energy giants in 2022 despite the crisis

Profits – a mammoth $200 billion The five Western energy giants are expected to benefit from a turbulent 2022 marked by huge volatility in oil and gas prices following Russia’s invasion of Ukraine. These are profits that may continue in 2023according to Reuters.

THE BP, Chevron, Exxon Mobil, Shell and TotalEnergies have provided their shareholders with unprecedented returns through dividends and record share repurchases and are expected to report combined earnings of $199 billion for 2022. Final quarterly results are expected to be released later this month and in early February. However, profits are forecast to fall to $158 billion this year as energy prices have eased, but will still be well above the previous record set in 2011, according to analysts at Refinitiv.

Also, 2022 seems to have been so powerful for the companies it helped also reduce their total debt to $100 billiona 15-year low allowing them to enter 2023 better prepared for any future recession.

Debt had risen to a record $270 billion in 2020 as they resorted to heavy borrowing to weather the plunge in demand brought on by the coronavirus pandemic.

“Because of this, we expect shareholder returns to remain strong for the year,” RBC Capital Markets analysts said.

But the big gains could revive calls for governments around the world to further raise windfall taxes on the sector as economies struggle with high energy prices, Reuters points out.

Shell has set aside $2.4 billion to pay additional taxes in Europe, TotalEnergies also $2 billion, while Exxon expects additional taxes to reach at least $2 billion in 2023.

According to estimates, Exxon and Chevron had the highest profits last year, close to $100 billion, as they benefited the most from high energy prices. Also, the two companies plan to increase investment by 10% this year through 2022, to about $41 billion.

Even BP, which aims to cut its oil and gas production by 40% by the end of the decade, has sharply increased its spending in shale deposits in the USA and the Gulf of Mexico.

European energy giants are also unlikely to significantly reduce their investments in fossil fuels, but may use some of their excess cash reserves to further invest in cleaner forms of energy.

Shell, BP and TotalEnergies, which aim to expand rapidly into renewables in the coming years, increased the pace of acquisitions of low-carbon businesses last year, including solar, wind and biogas. But they have yet to reveal their plans for 2023.

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