In June last year, the share price of oil and gas giant Exxon Mobil Corp hit a new high eight years later, and the former global market capitalization leader returned.

By Thursday's close, Exxon Mobil Corp's shares had risen more than 4 per cent to $117.76, an all-time high. The company will report fourth-quarter 2022 results ahead of U. S. stocks next Tuesday, January 31.

Earlier this month, Exxon Mobil Corp said the company expected its fourth-quarter profit to fall by about $3.7 billion from the previous quarter because of falling oil and gas prices, but analysts noted that refining margins could be much higher than expected.

Current analysts expect earnings per share of $3.32 per share in the fourth quarter of 2021, up 62% from $2.05 in the fourth quarter of 2021. Earnings per share in fiscal year 2022 were $13.98 per share, up 160% from $5.38 in fiscal 2021. Earnings per share in fiscal year 2023 were down 28% after an extraordinary year.

Not only Exxon Mobil Corp but also other oil and gas giants are expected to make staggering profits.

According to the media, analysts expect data to show that the five oil and gas giants, Exxon Mobil Corp, Chevron Corp, Shell, TotalEnergies SE and BP P.L.C., will report a total annual profit of $198.7 billion, or nearly $200 billion, in 2022 in the next few days. more than 50 per cent higher than the annual record set more than a decade ago.

Analysts' profit expectations for these oil and gas companies have dimmed in 2023 as investor concerns about slowing global economic growth, plummeting natural gas prices, high inflation and uncertainty about central bank monetary policy have darkened. however, forecasts for dividends and buybacks have not cooled.

Analysts said the "cash tsunami" generated by the oil and gas giants over the past 12 months meant the industry was able to maintain high dividend growth and share buybacks. Crucially for shareholders, the management teams of these companies delayed plans to increase spending despite the commodities boom. Instead, they chose to repay debt and increase investor returns.

Us oil and gas giant Chevron Corp, for example, announced on Wednesday that it would buy back $75 billion of shares, five times the company's current annual buyback spending. The news spurred Chevron Corp's share price to rise nearly 3 per cent on Wednesday and nearly 5 per cent on Thursday.

This is in sharp contrast to the previous expansion cycle.

In a high-profit environment, oil and gas giants insist on improving shareholder returns while controlling spending

Kim Fustier, head of European oil and gas research at HSBC, said:

"Commodity prices are now falling across the board from the record levels experienced in 2022, but 2023 still looks like a very strong year." "this year is likely to be the second best year in history in terms of overall dividend distribution and share buybacks."

Although energy prices have fallen sharply-crude oil and natural gas are now well below where they were during the escalation of the conflict between Russia and Ukraine at the end of February-this could help put the global economy and energy companies on a more stable long-term growth trajectory. Lower energy costs help ease inflationary pressures, which in turn ease the pressure on central banks around the world to continue to raise interest rates, eventually stimulating a recovery in consumer spending.

Oil exploration companies and oil and gas giants are focusing on returning record profits to shareholders while controlling spending. The strategy has sparked political criticism from politicians from Brussels to Washington, who want to increase the supply of these companies to drive down oil prices, rather than improving shareholder returns.

Although the price of crude oil has fallen 11% since the conflict between Russia and Ukraine, the share prices of all five oil and gas giants have risen sharply. The top 10 companies in the S & P 500 last year were all energy companies, and Exxon Mobil Corp's shares rose about 80%, the best year on record.

Although oil and gas companies account for only 5% of the market capitalization of the s & p 500, the industry accounts for about 10% of the index's profits, according to statistics.

Jeff Wyll, a senior analyst at Neuberger Berman Group, a veteran asset management company with about $400 billion under management, said:

"investors are attracted by many of the current characteristics of the industry." The industry tried to become a growth industry, but failed. Now it is reinventing itself as an industry with a high dividend yield, which is attractive in this highly uncertain environment. "

The key to the fate of the oil and gas giants is whether they can deliver on the promises they made last year to improve shareholder returns during rising commodity prices, analysts said.

Noah Barrett, chief energy analyst at Janus Henderson, an asset management giant with about $275 billion under management, said:

"I expect them to maintain these shareholder returns, regardless of the level of oil prices, the basic dividend is very safe, the balance sheet is in good shape, and I expect them to continue to buy back shares on a large scale."

Investors are also eager to hear that executives continue to insist on controlling capital spending. For much of the past decade, the huge increase in spending has eroded shareholder returns and left the industry vulnerable to a similar collapse in oil prices in 2016 and 2020.

So far, the giants still seem to be controlling capital spending. Although both Exxon Mobil Corp and Chevron Corp raised their total spending targets for this year this year, the growth was mainly driven by inflation rather than long-term growth projects.

Despite a 500 per cent rise in oil prices from early 2020 to mid-2022, real global capital expenditure on oil and gas has fallen, Goldman Sachs Group said in a report on January 9.

It should be noted that investors in oil and gas companies still need to be wary of windfall tax.

A key question for executives this earnings season is how much money they have set aside for Europe's proposed windfall tax. Exxon Mobil Corp estimated to pay $2 billion in related costs, but the company said it was taking legal action. Shell said its bill for 2022 could total $2.4 billion.

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