Party on

2 Mar 2022 By Robert Cyran Follow @rob_cyran

Prices are high, and Russia’s 8% of global supply might evaporate, but Chevron and Exxon promised this week their focus is lower costs and returning capital. That’s a far cry from last time’s destructive investment binge. They may end up ruing missed drilling opportunities.

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Exxon Mobil said on March 1 it would exit Russian oil and gas operations and make no new investments in the country as a result of Russia’s invasion of Ukraine.

Exxon manages a large gas and oil project on Sakhalin Island in Russia’s Far East on behalf of a consortium of Indian, Japanese and Russian companies. Exxon valued its Russian assets at just over $4 billion in its latest annual report.

On March 2, Exxon Mobil said planned cost reductions of $9 billion a year would double earnings and cash flow potential by 2027 compared to 2019. It also said breakeven costs, or the price needed to cover capital investment and dividends, would decline from $41 a barrel in 2021 to about $30 in 2027.

On Chevron’s investor day on March 1, the company raised its buyback program from $3 billion to $5 billion annually, to between $5 billion and $10 billion, and said that the program would be sustainable for five years if the oil price was $50 a barrel. At $75 a barrel, the company said it could repurchase over a quarter of outstanding stock over five years. Chevron said its Russian exposure was limited compared to peers.

Context News

Exxon Mobil said on March 1 it would exit Russian oil and gas operations and make no new investments in the country as a result of Russia’s invasion of Ukraine.

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