From Barron's October 26:
A warning from President Biden could dampen the party atmosphere for Big Oil’s expected third-quarter earnings bonanza.Biden, who is worried about high gasoline prices, said last week that oil companies should be more focused on increasing oil supplies to bring down prices than on rewarding shareholders. “My message to the American energy companies is this: You should not be using your profits to buy back stock or for dividends,” he said in a speech at the White House. “Not now. Not while a war is raging.”
The message complicates earnings season for companies that are otherwise in the strongest shape they’ve been in for years. While shareholders want them to spend more cash on payouts, there’s political pressure to limit those rewards. Similarly, European companies will have to assuage concerns in Europe about high commodity prices, even as they accelerate efforts to grow low-carbon businesses.
There’s no doubt earnings will be high, and will outpace companies in every other sector. The average S&P 500 stock is expected to increase its earnings 1.8% year over year in the third quarter. The average energy stock in the index is expected to grow earnings 118%. For investors, two issues will hang over the results—whether their stocks will respond to the windfalls, and what the companies will do with all that money.
Starting on Thursday, Big Oil companies in Europe and the U.S. will begin reporting their third quarter results. The five best-known oil majors— Exxon Mobil (XOM), Chevron (CVX), Shell (SHEL), BP ( BP ) and TotalEnergies (TTE)—are on track to earn $50 billion collectively, up from $15 billion a year earlier but down from about $60 billion in the second quarter. Add in Norwegian giant Equinor (EQNR) and earnings could reach $57 billion. Shell and TotalEnergies report on Thursday, with Exxon, Chevron and Equinor going on Friday. BP releases earnings next Tuesday....
....MUCH MORE
