Big Oil Sees More Profits This Year After 2022 Windfall

The West's top energy firms are expected to rake in a combined record profit of $200 billion from a turbulent 2022 marked by huge volatility in oil and gas prices after Russia's invasion of Ukraine with buoyant earnings likely to roll through 2023, Ton Bousso and Sabrina Valle reported for Reuters.

Photo Insert: Big oil firms are expected to post a combined profit of $199 billion for 2022 when they report final quarterly results later this month and in early February.

Flush with cash, BP, Chevron, Exxon Mobil, Shell, and TotalEnergies also delivered shareholders unprecedented returns through dividends and share buybacks last year. These firms are expected to post a combined profit of $199 billion for 2022 when they report final quarterly results later this month and in early February.

Profits are forecast to decline to $158 billion this year due to weaker energy prices and inflationary concerns, but that would still be well above the previous 2011 record, according to analyst estimates provided by Refinitiv.

A strong 2022 also helped these companies cut their debt to a combined $100 billion, a 15-year low, allowing them to start 2023 more prepared for any future downturn.

Net debt hit an all-time high of around $270 billion in 2020 when they borrowed heavily to weather the COVID-19 pandemic. "Because of this, we expect shareholder returns to remain robust for the year," RBC Capital Markets analysts said in a note.

But the bumper profits could revive calls on governments around the world to further hike windfall taxes on the sector as economies struggle with high energy prices.

Shell earmarked $2.4 billion in extra tax in 2022 from windfall taxes in Europe and Britain, while Exxon said windfall taxes around the world would cost the company at least $2 billion in 2023. TotalEnergies said on Tuesday it would take a $2 billion windfall tax hit in the fourth quarter.

WEEKLY FEATURE : MVP Group Keeps Lights On During Pandemic