Latest news with #Rystad
Express Tribune
3 days ago
- Business
- Express Tribune
OPEC+ oil producers plan big hike
While the Omicron coronavirus variant is rapidly taking hold, demand-side concerns are easing amid rising evidence that it is less severe than previous variants.. PHOTO: REUTERS Listen to article The world's largest group of oil producers, OPEC+, stuck to its guns on Saturday with another big increase of 411,000 barrels per day for July as it looks to wrestle back market share and punish over-producers. Having spent years curbing production – more than 5 million barrels a day (bpd) or 5% of world demand – eight OPEC+ countries made a modest output increase in April before tripling it for May, June and now July. They are spurring production despite the extra supply weighing on crude prices as group leaders Saudi Arabia and Russia seek to win back market share as well as punish over-producing allies such as Iraq and Kazakhstan. The eight countries held an online meeting on Saturday to set July production. They also discussed other options, an OPEC+ delegate said. On Friday, sources familiar with OPEC+ talks had said they could discuss an even larger hike. In a statement OPEC+ cited a "steady global economic outlook and current healthy market fundamentals, as reflected in the low oil inventories" as its reasoning for the July increase. Its increased supply is weighing on crude prices, squeezing all producers, but some more than others, including a key group of rivals – US shale producers, analysts say. "Three strikes from OPEC+, and none were softballs. May warned, June confirmed, and July fires a shot across the bow," said Jorge Leon, head of geopolitical analysis at Rystad and a former OPEC official. Since April, the OPEC+ eight have now made or announced increases totalling 1.37 million bpd, or 62% of the 2.2 million bpd they aim to add back to the market. Higher summer oil demand favours increasing output at this time, OPEC+ officials including Russian Deputy Prime Minister Alexander Novak have said. Algeria was among a small number of nations that requested a pause in the output hikes on Saturday.
Yahoo
5 days ago
- Business
- Yahoo
Record Breaking Shareholder Payouts Under Threat, Rystad Warns
This article was first published on Rigzone here In a release sent to Rigzone recently by the Rystad Energy team, Rystad warned that 'record breaking shareholder payouts are now under threat as [the] oil price hovers at $60 [per barrel]'. 'Western energy supermajors are faced with an increasingly difficult challenge - either keep their promise of returning ever-higher shareholder returns or risk spurning investors to save their balance sheets,' the company stated in the release. Rystad noted in the release that record cash has been allocated to shareholders, but added that, with recent double-digit dips in oil prices not reversing, these payouts will be increasingly difficult to maintain. The company estimated in the release that the majors 'will likely need to reduce both investment and shareholder payouts to balance their cash flows in the current oil price environment'. Total shareholder payouts by BP, Chevron, Eni, ExxonMobil, Shell, and TotalEnergies reached $119 billion in 2024, Rystad highlighted in the release, pointing out that this beat the previous record set in 2023. 'The payout ratio - shareholder payouts as a share of corporate cash flow from operations (CCFO) - climbed to 56 percent, well above the 30-40 percent range that was typical from 2012 to 2022,' Rystad said in the release. 'If shareholder payouts remain at 2024 levels throughout 2025, this would imply that companies distribute more than 80 percent of their cash flow to investors, based on first quarter CCFO as a proxy for full-year performance,' it added. 'This would mark a sharp and highly unsustainable jump from the 56 percent payout ratio recorded in 2024. However, many firms have established payout targets tied to CCFO, and based on current cash generation levels, shareholder payouts could fall by 20-40 percent in 2025,' it continued. Rystad noted in the release that, to keep up with this increasing payout ratio, the majors have been sustaining shareholder payouts in part by drawing down cash reserves. 'Following a peak of nearly $160 billion between the third quarter of 2022 and the first quarter of 2023, aggregate cash reserves have steadily declined, reaching just above $120 billion as of the first quarter of 2025,' Rystad highlighted. 'If current payout levels are sustained throughout the year, total shareholder payouts could again reach $119-$120 billion in 2025, matching the record set in 2024,' it added in the release. Rystad warned in the release, however, that there are several downside risks to this estimate. 'First, maintaining these payout levels would imply that the majors are distributing over 80 percent of their cash generation, based on first quarter 2025 CCFO as a proxy for full-year performance,' it said. 'Second, the recent decline in oil prices - now hovering around $60 per barrel - could force the majors to make a difficult choice between cutting buybacks, which would be unpopular with investors, or using their balance sheets to support current repurchase levels,' it added. 'Third, several companies have formal payout ratio targets linked to CCFO. For example, BP, Eni, and TotalEnergies have stated targets shareholder returns of 30-40 percent of CFFO, while Shell targets 40-50 percent,' it continued. 'Applying these payout targets to current cash flow levels, total shareholder payouts could fall by approximately 20 percent to 40 percent from $119 billion to around $70 to $95 billion in 2025,' Rystad projected in the release. Espen Erlingsen, Head of Upstream Research at Rystad Energy, said in the release, 'recent market volatility has left the majors with few economically attractive options that both allow for reinvestment while maintaining a competitive capital returns framework'. 'As companies like Shell and ExxonMobil continue to push ahead with large-scale buyback programs despite shrinking cash inflows, the durability of these strategies is in question,' Erlingsen added. 'For now, the majors are holding the line. But if oil prices remain depressed, adjustments may be inevitable. Buybacks - typically more flexible than dividends - are likely to be the first lever pulled,' Erlingsen continued. The Rystad head went on to highlight in the release that 'all the majors have thus far upheld their shareholder payout guidance, despite weakening market fundamentals'. 'Shareholders have been accustomed to a stronger commodity price environment over the last few years, and recent market shocks will undoubtedly have a lasting impact on payout levels and investor expectations,' Erlingsen noted. 'Although the drop in oil prices creates downside risk for shareholder returns, the majors will remain reluctant to scale back their capital returns framework in the near-term,' Erlingsen went on to state. Shell, BP, TotalEnergies Rigzone contacted Shell, BP, TotalEnergies, Eni, ExxonMobil, and Chevron for comment on Rystad's release. Shell declined to comment. None of the other companies have responded to Rigzone at the time of writing. In capital markets day 2025 slides posted on Shell's website back in March, Sinead Gorman, Shell's Chief Financial Officer, said, 'our dividend remains a financial priority, and our confidence in sustaining a progressive approach is well supported, with our dividend breakeven at around $40 per barrel'. 'Additionally, given that we view share buybacks as an attractive use of our cash, we will continue to allocate capital towards buybacks, even at a $50 per barrel world utilizing our balance sheet strength if necessary,' Gorman added. In its first quarter 2025 results statement, which was posted on its website in April, BP said, 'our policy is to maintain a resilient dividend'. 'Subject to board approval, we expect an increase in the dividend per ordinary share of at least four percent per year. For the first quarter, BP has announced a dividend per ordinary share of eight cents,' it added. Take control of your THOUSANDS of Oil & Gas jobs on Search Now >> 'Share buybacks are a mechanism to return excess cash. When added to the resilient dividend, we expect total shareholder distributions of 30-40 percent of operating cash flow, over time,' it continued. 'Related to the first quarter results, BP intends to execute a $0.75 billion share buyback prior to reporting the second quarter results. The $1.75 billion share buyback program announced with the fourth quarter results was completed on 25 April 2025,' BP went on to state. In a statement made during a meeting with TotalEnergies' board of directors on April 29, TotalEnergies CEO Patrick Pouyanne said, 'confident in the company's ability to reach its 2025 underlying growth objective and taking into account the strength of its balance sheet … the board of directors has confirmed the distribution of the first interim dividend of EUR 0.85/share [$0.96/share] for fiscal year 2025, an increase of 7.6 percent compared to 2024 and consistent with the attractive dividend growth guidance announced in February'. 'Furthermore, it has also decided to again continue share buybacks for up to $2 billion in the second quarter despite a softening price environment with Brent below $70 since the beginning of April and an uncertain geopolitical and macroeconomic context,' he added in the statement, which was included in the company's first quarter 2025 results statement that was posted on the company's site on April 30. Eni, ExxonMobil, Chevron In a statement posted on its site on May 16, Eni announced that, 'following the authorization granted by the Shareholders' Meeting held on 14 May 2025', a new share buyback program would be launched 'in the next days'. 'The new Share Buyback Program, to be executed by April 2026, will concern up to a maximum of 315 million of Eni's shares (approximately 10 percent of share capital), up to a total maximum of EUR 1.5 billion [$1.6 billion], as announced on 27 February 2025 in the context of the Capital Markets Update,' it added. 'This amount may be increased up to a total maximum of EUR 3.5 billion [$3.9 billion], in case of upside scenarios of the Cash Flow From Operations,' it continued. 'The new Share Buyback Program will have the purpose of paying to the Shareholders an additional remuneration compared to the distribution of dividends, therefore, the treasury shares acquired will be cancelled without reduction of the share capital, by July 2026, in accordance with the resolutions of the Shareholders' Meeting held on 14 May 2025,' it went on to state. In a statement posted on its site on May 14, Eni revealed that a meeting of its shareholders resolved to 'approve the distribution for, and in place of, the payment of the dividend relating to financial year 2025 of a sum of EUR 1.05 [$1.19] per share in tranches'. In its first quarter results statement, which was posted on En's site in April, the company highlighted a 'five percent increase in FY '25 dividend to EUR 1.05 per share'. Also in its first quarter results statement, Eni said adjusted cash flow before working capital was EUR 3.4 billion [$3.8 billion], 'significantly covering gross capex of EUR 1.9 billion [$2/1 billion]'. 'The resulting free cash flow of EUR 1.5 billion and the proceeds from the portfolio management of about EUR 3 billion [$3.3 billion], mainly relating to the closing of the KKR 25 percent investment in Enilive, funded EUR 1.2 billion [$1.3 billion] of cash returns to shareholders (including the third instalment of the 2024 dividend for EUR 0.76 billion [$0.86 billion]) and contributed to reduce net borrowings of almost EUR 1.8 billion [$2.0 billion] to EUR 10.3 billion [$11.6 billion] from 2024 year-end,' Eni added in the statement. Eni CEO Claudio Descalzi said in the company's first quarter results statement, 'we remain financially disciplined and resolute on leveraging our competitive advantages built on exploration, proprietary technologies, and innovative business models, to deliver transformation and generate value for our shareholders'. In its first quarter results statement, which was posted on its site earlier this month, ExxonMobil highlighted that 'shareholder distributions of $9.1 billion included $4.3 billion of dividends and $4.8 billion of share repurchases, consistent with the company's announced plans'. The company's chairman and CEO, Darren Woods, said in that statement, 'in this uncertain market, our shareholders can be confident in knowing that we're built for this'. 'The work we've done to transform our company over the past eight years positions us to excel in any environment,' he added. In Chevron's first quarter 2025 statement, which was also posted on the company's site earlier this month, Chevron highlighted that it returned $6.9 billion of cash to shareholders during the quarter, including share repurchases of $3.9 billion and dividends of $3.0 billion. The company added in the statement that its board of directors declared a quarterly dividend of $1.71 per share, payable June 10, 2025, 'to all holders of common stock as shown on the transfer records of the corporation at the close of business on May 19, 2025'. In that statement, Mike Wirth, Chevron's chairman and chief executive officer, said, 'this quarter reflected continued strong execution and progress on our objective to deliver superior shareholder value'. 'Over the last three years, Chevron has returned more than $78 billion of cash to shareholders,' he added. 'Despite changing market conditions, our resilient portfolio, strong balance sheet, and consistent focus on capital and cost discipline position us to deliver industry-leading free cash flow growth by 2026,' he continued. To contact the author, email More From The Leading Energy Platform: North Atlantic in Talks with ExxonMobil to Buy French Refinery Complex Standard Chartered Expects OPEC+ 8 to 'Continue with Accelerated Unwinding' Equinor Offers $1.75B Bonds GasBuddy Head Predicts 'Relatively Stable Stretch for Gas Prices' >> Find the latest oil and gas jobs on <<
Edmonton Journal
5 days ago
- Business
- Edmonton Journal
Varcoe: Canadians continue to shun U.S. trips, says WestJet CEO
Article content After Prime Minister Mark Carney met with Trump in Washington earlier this month, the annexation discussion subsided from the White House. However, the U.S. president mentioned it again on social media Tuesday, saying Canada could join his country's Golden Dome defence system for $61 billion but it would cost 'ZERO DOLLARS if they become our cherished 51st state. They are considering our offer!' How long could a travel boycott continue? 'We do assume that at some point in time, there will be some kind of agreement, hopefully,' von Hoensbroech added. 'What we have seen in the past in our industry is that whenever there's a change in demand pattern for political reasons, it's usually transitional, and long-term demand trends usually flow back.' Susan Bell, a senior vice-president with consultancy Rystad Energy, said the decline in travel to the U.S. isn't just coming from Canada, but also from fewer travellers coming from other countries — and it's showing up in less jet fuel demand. About 20 per cent of U.S. aviation fuel demand is typically tied to international flights. 'Foreign travel into the U.S. has dropped dramatically,' Bell said at a Rystad conference in Calgary on Wednesday. 'Europeans are not travelling to the U.S. People from Mexico are not travelling to the U.S., and that is really impacting international jet fuel demand in the U.S.'
CNBC
23-05-2025
- Business
- CNBC
Bye-bye buybacks? Big Oil's record-breaking shareholder payouts are under threat
A protracted slump in crude prices has ramped up the pressure on Big Oil's commitment to allocate cash to shareholders. Western energy supermajors have long sought to return cash to investors through buyback programs and dividends to keep their shareholders happy. Energy executives have also expressed confidence that they can continue to reward investors following a relatively robust set of first-quarter earnings. Some analysts, however, are less convinced about Big Oil's pledge to return ever-higher shareholder returns, citing already stretched balance sheets and a sharp drop in crude prices. Oil prices have fallen more than 12% year-to-date amid persistent demand concerns and U.S. President Donald Trump's back-and-forth trade policy. Espen Erlingsen, head of upstream research at consultancy Rystad Energy, said recent market volatility has left the energy majors with "few economically attractive options" that allow for reinvestment while maintaining a competitive capital returns framework. "As companies like Shell and ExxonMobil continue to push ahead with large-scale buyback programs despite shrinking cash inflows, the durability of these strategies is in question. For now, the majors are holding the line. But if oil prices remain depressed, adjustments may be inevitable," Erlingsen said in a research note published Thursday. Share buybacks, which are typically more flexible than dividends, are "likely to be the first lever pulled," he added. In that vein, weaker crude prices mean energy majors will have less cash to return to shareholders. Investor concern over the sustainability of Big Oil's shareholder returns comes after a year of record-breaking payouts. Analysts at Rystad said total shareholder rewards from the likes of Shell, BP, TotalEnergies, Eni, Exxon Mobil and Chevron climbed to a whopping $119 billion in 2024, beating the previous record set in 2023. The payout ratio, which refers to shareholder payouts as a share of corporate cash flow from operations (CFFO), meanwhile jumped up to 56% last year, Rystad said. That was well above the 30% to 40% range that was typical for the industry from 2012 through to 2022, the analysts added. If shareholder payouts were to remain at 2024 levels throughout 2025, Rystad said this would imply companies distribute more than 80% of their cash flow to investors. The estimate was based on Big Oil's first-quarter CFFO as a proxy for full-year performance. For European majors, analysts at Bank of America said at the start of the year in a note entitled "bye-bye buybacks?" that it anticipated cuts in such returns, from companies whose balance sheets were already stretched. The Wall Street bank cited BP, Repsol and Eni at the time. It added that only Shell, TotalEnergies and Equinor were among the regional players likely to keep their respective 2025 buyback run-rates intact. Spokespersons for Repsol and Eni were not immediately available to comment when contacted by CNBC. So far, BP is the only European energy major to have trimmed its buyback run-rate. The beleaguered British oil company last month posted a sharp fall in first-quarter profit and reduced its share buyback to $750 million, down from $1.75 billion in the prior quarter. BP, which has been the subject of intense takeover speculation, also reported significantly lower cash flow and rising net debt for the first quarter. Lydia Rainforth, head of European energy, equity research at Barclays, said BP's future appears to be "really bright" — on the condition that the company can get through the next six months. "If I think about when is that point of maximum weakness for BP, it is over the next six months, ultimately. Debt continues to go up a little bit, production continues to fall until mid-2026," Rainforth told CNBC's Steve Sedgwick on Thursday. "As I get towards the end of the year, hopefully we'll see that sum of divestments taking down debt. Things like … selling their lubricants business, that could raise between $12 billion to $15 billion. It brings down debt, you start to see the benefit of cost savings coming through, and then production growth starts kicking in next year," she added.
CNBC
14-05-2025
- Business
- CNBC
Oil prices hold near two-week highs on trade war reprieve, weaker dollar
Oil prices held near two-week highs in early trading on Wednesday, supported by an agreement between the U.S. and China to temporarily lower their reciprocal tariffs and a falling U.S. dollar. Brent crude futures inched down 10 cents, or 0.15%, by 0008 GMT to $66.53 a barrel. U.S. West Texas Intermediate (WTI) crude slipped 7 cents, or 0.11%, to $63.60. Both benchmarks climbed more than 2.5% in the previous session. The dollar index, which measures the greenback against a basket of currencies, fell 0.67% on Tuesday after data showed U.S. inflation was lower than expected. A weaker dollar makes oil less expensive for holders of other currencies, increasing demand. The two largest economies on Monday agreed to pause their trade war for at least 90 days, with the U.S. cutting tariffs to 30% from 145% and China slashing duties on U.S. imports to 10% from 125%. Prices had climbed more than $1.60 a barrel on Tuesday following the agreement, settling up nearly 3%. Rystad energy analysts said in a note that the agreement had "eroded some demand side pessimism," though cautioning that there could be lingering impact from the tariffs despite the rollbacks. The market was supported by reported declines in U.S. gasoline and distillate inventories, a sign of resilient fuel demand. Gasoline inventories fell by 1.4 million barrels and distillate stocks fell by 3.7 million barrels, market sources said on condition of anonymity, citing American Petroleum Institute figures on Tuesday. However, crude stocks rose by 4.3 million barrels. Analysts polled by Reuters expected gasoline stocks to fall by 600,000 barrels, distillate inventories to rise by about 100,000 barrels and crude stocks to fall by 1.1 million barrels. Official weekly inventory data from the U.S. Energy Information Administration is due on Wednesday at 10:30 a.m. EDT (1430 GMT). The market is watching U.S. President Donald Trump's trip to the Gulf. He kicked off the visit Tuesday with an appearance at an investment forum in Riyadh, where he announced that the U.S. would lift longstanding sanctions on Syria and secured a $600 billion pledge from Saudi to invest in the U.S. Rystad Energy's global head of commodity markets Mukesh Sahdev said that preventing oil price spikes over the summer travel season will be a key part of the president's agenda on the trip, adding that the U.S. could take advantage of lower prices to buy more Middle East crude for its Strategic Petroleum Reserve. "The big unknown for the market is how U.S. actions related to Iran, Russia and Venezuela will result in supply disruptions or additions," Sahdev said. The U.S. on Tuesday imposed fresh sanctions on some 20 companies it said were helping Iran's Armed Forces General Staff and its front company, Sepehr Energy, send Iranian oil to China. The sanctions come following a fourth round of U.S.-Iran talks in Oman aimed at addressing disputes over Iran's nuclear program.
