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Current payouts unsustainable with oil below $80 a barrel

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Crude oil prices expected to continue falling

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Companies under pressure to cut debt

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Reduced buybacks and job cuts announced

By America Hernandez and Stephanie Kelly

PARIS/LONDON, Oct 7 - The five biggest global oil majors

are moving to cut costs, jobs and share buybacks as falling oil

prices threaten to make shareholder payouts unsustainable

without increasing debt, analysts said.

Chevron ( CVX ), ExxonMobil ( XOM ), BP, Shell

and TotalEnergies have pledged high returns for the

past decade to avert an investor exodus as fossil fuels lost

their appeal.

But maintaining those generous payouts, which have topped

$100 million annually since 2022, has increasingly been funded

by debt as energy prices retreated from highs caused by

sanctions and supply disruptions in the wake of Russia's

invasion of Ukraine.

Oil majors, now pressed to reinvest in exploration and

production, must choose between cutting some operations, letting

debt rise to unsustainable levels or weaning shareholders off

popular but pricey returns.

Rising global oil output, meanwhile, is expected to keep

prices falling, leaving the majors facing some difficult

decisions.

Most oil majors need oil prices above $80 a barrel to

sustain current levels of dividends and share buybacks, which

hit record highs buoyed by bumper profits in 2022, according to

data from RBC Capital Markets and BofA Global Research.

But Brent oil prices fell below $65 last week, the lowest since

July, on fears of oversupply. Citi expects oil prices to drop to

the low $60s and Goldman Sachs to the $50s next year.

To contend with lower prices, TotalEnergies said it will reduce

its buybacks from the fourth quarter of this year and cut costs

to the tune of $7.5 billion by the end of 2030 to reduce debt.

BP and Chevron ( CVX ) have reduced buybacks this year. Shell has

not announced plans for any cuts to its buyback programme.

More than a dozen energy companies have announced job cuts for

2025 and 2026, including ExxonMobil ( XOM ), Chevron ( CVX ), Shell and BP.

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