Commodities

The cash flow of the U.S. oil companies will rise by 68% per barrel in 2022


© Stocksak. FILE PHOTO – The sun is seen behind an oil pump jack in Texas’ Permian Basin, Loving County, Texas. November 22, 2019. REUTERS/Angus Mortant/File Photograph

By Sabrina Valle

HOUSTON (Stocksak). – The U.S. upstream oil industry is expected to have 68% more free cash flows per barrel in 2022, as surging prices fuel profits and output growth lingers at 4.5% annually, Deloitte consultancy stated on Monday.

The study illustrates the conflict between the White House, oil companies and how they should allocate skyrocketing profits due to high energy prices.

Exxon Mobil Corp (NYSE: Chevron Corp (NYSE 🙂 is expected to report strong upstream quarterly results on Friday. Some analysts expect a new round increase in dividends, and buybacks.

Joe Biden, the US President, has called on producers to stop redistributing cash to shareholders and invest in output to lower fuel costs for consumers.

Deloitte reported that companies are now focusing on cash discipline and cutting costs, rather than in the past, which would have led to higher investment rates and higher energy prices.

Nearly 40% (of the top 100 oil and company executives in the U.S.) ranked debt repayments and return cash to shareholders as their top priorities. Amy Chronis from Deloitte Vice-chair for U.S. Oil and Gas said that.

A Deloitte study in the past showed that energy prices could nearly double the oil producers’ free cash flow to $1.4 trillion this year. This gives them money to finance a quicker shift to renewable fuels, eliminate debt, or reward investors.

(Oil and gas set to report record free cash flow in 2022 Oil and gas set to report record free cash flow in 2022 https://graphics.reuters.com/OIL-GLOBAL/znpnerrlzvl/chart.png)

The firm projected that U.S. upstream investments will grow 29% to $108 billion this year, which is slower than cash flow gains.

“We are really seeing caution as far as where the capex will go,” Kate Hardin, Deloitte Energy Executive said.

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