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Exxon and Shell maintain buybacks amid oil price slump

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Chevron ( CVX ) and BP reduce buybacks due to market conditions

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Exxon benefits from Guyana oilfield, Chevron ( CVX ) seeks entry

By Sheila Dang and Shadia Nasralla

HOUSTON/LONDON, May 2 (Reuters) - Big Oil's

first-quarter earnings have shown a clear split in how companies

are positioned to weather the downturn sparked by a slump in oil

prices to a four-year low in April.

Investors were focused on whether companies would cut share

repurchases, since lower crude prices would leave them with less

cash to fund the programs. Buybacks and dividends are key to

investor interest in the oil industry.

U.S. oil producer Exxon Mobil ( XOM ) and UK-based Shell

kept the pace of share buybacks. Their top rivals,

U.S.-based Chevron ( CVX ) and UK-based BP said they

would reduce buybacks in the second quarter.

The difference speaks to where each company is in its business

cycle.

Exxon has benefited from prolific production from its Guyana

oilfield, the largest offshore oil find in at least a decade.

A major player in the top U.S. oilfield, the Permian Basin, as

well as in Guyana, Exxon increased production by 20%

year-over-year. Both areas are highly profitable and the company

is working to reduce its operating costs, said Exxon CEO Darren

Woods.

"In this uncertain market, our shareholders can be confident

in knowing that we're built for this," Woods said in the

company's first-quarter earnings statement.

Oil prices recorded their largest monthly drop since 2021 this

week as investors priced in the expected damage to the global

economy - and contingent fuel demand - from U.S. President

Donald Trump's trade policies.

Exxon's net-debt-to-capital ratio was 7%. It was the only

integrated oil company that did not increase net debt during the

quarter, said Kim Fustier, head of European oil and gas research

at HSBC.

Chevron's ( CVX ) first-quarter oil and gas production was flat

compared to the previous year as growth in Kazakhstan and the

Permian was offset by loss of production from asset sales.

Earlier this year, the company announced it would lay off up to

20% of its staff as part of an effort to simplify the business

and cut up to $3 billion in costs.

Chevron ( CVX ) is attempting to buy into the Guyana play through the

acquisition of one of Exxon's minority partners in the project,

Hess. Exxon is in arbitration over that deal, and claims

to have the right of first refusal for Hess' stake in the field.

Exxon repurchased $4.8 billion of shares during the first

quarter, putting it on track to meet its annual target of $20

billion.

Chevron ( CVX ) said it would reduce buybacks to between $2 billion and

$3.5 billion in the current quarter, down from $3.9 billion

between January and March, which it said was a reflection of

market conditions.

"Exxon's low-cost production gave it room to hold the line

on buybacks, with Chevron ( CVX ) pulling back as weaker oil prices

bite," said Jake Behan, head of capital markets at financial

products firm Direxion.

SHELL IMPRESSES, BP DISAPPOINTS

In Europe, Shell's first-quarter earnings beat analyst

expectations. The company said it planned to buy back $3.5

billion worth of shares over the next three months, the 14th

consecutive quarter of a buyback program of at least $3 billion.

BP missed earnings expectations with a 48% fall in profit

to $1.4 billion and also slashed its share buyback program from

around $1.8 billion to $750 million a quarter.

After the disappointing results, BP could miss consensus

expectations for second-quarter earnings by 20%, said Biraj

Borkhataria, an analyst at RBC Capital Markets, in a note.

"The combination of a weaker (free cash flow), higher

leverage and patchy execution leaves us more cautious on the

name versus peers," he wrote.

The British oil major is in the midst of a strategy change

back toward oil and gas after a failed attempt to move more

aggressively than rivals toward a low-carbon energy business

model.

BP had underperformed its biggest rivals before the downturn,

making it a potential takeover target. Shell CEO Wael Sawan said

on Friday he would rather buy back more of his company's own

shares than bid for BP.

Shell kept its investment budget at between $20 billion and $22

billion for the year, while BP said it will cut spending by $500

million, to a $14.5 billion budget.

BP also indicated it could offload more assets, increasing

its outlook for asset sales this year to between $3 billion and

$4 billion, from $3 billion previously.