The need to borrow in order to cover buybacks isn't necessarily a problem for US oil majors whose debt-to-capital ratios are well below historical averages.
Big Oil Needs to Borrow to Finance Own Share Buybacks - Oil majors have been reporting lower Q3 profits, suggesting that the era of windfall revenues is coming to an end, with the average quarter-on-quarter dip for the five leading companies averaging 12%. - ExxonMobil, Chevron, Shell, TotalEnergies, and BP will earn a combined $24.4 billion in Q3, which leaves all companies except Shell unable to cover their dividends and share buybacks with free cash flow.
- At the same time, expectations for an improving supply and demand balance in 2025 are being pushed back further down the road amidst LNG project delays, with summer 2025 TTF contracts surging to a rare premium over winter 2025-2026. - Hedge funds have benefitted from Europe’s gas volatility, first by ramping up their net long positions to a record high of 268 TWh in early September, then selling it off over the upcoming weeks.
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