Big Oil generated $613bn in cash on post-pandemic energy price surge

The record profits and cash flows of the world’s biggest oil companies have enabled shareholders to reap significant return while driving a rise in mergers and acquisitions activity, a report has said.

BP, Chevron, ExxonMobil, Shell and TotalEnergies, collectively known as Big Oil, generated a combined operating cash flow of $613 billion between January 2021 and September 2023, Moody’s said in a report last week.

Brent crude, the benchmark for two thirds of the world’s oil, soared to about $140 a barrel after Russia’s invasion of Ukraine last year.

Oil prices have since nearly halved amid demand concerns and an ease in supply restrictions.

The big energy companies increasingly opted to return surplus cash flow to shareholders via dividends and share buybacks.

Last year, share buybacks reached a record $57 billion, which was more than the total combined amount from 2015 to 2021, Moody’s said.

For the nine months to September 2023, share buybacks already stood at $48 billion.

Moody’s expects the “sharpened focus” on shareholders to persist.

The rating agency said it viewed that as a “credit negative” because it directs cash flow away from the companies’ balance sheets and investments.

Meanwhile, the combined capital expenditure of the five companies rose by 19 per cent between 2020 and 2022, but still only represented around half of what they invested during the last peak investment cycle a decade ago, Moody’s said.

“Total investment may grow in the coming years but will likely remain well below historical peaks,” the rating agency said.

“This investment discipline is driven by investor demands but also greater focus on low costs, more stringent emissions criteria, and desire for quick return on assets.”