Oil And Gas Giant Pays 10 Billion Dividends. Do Investors Still Buy Fossil Energy?

After the most difficult year in history, the rebound in oil prices has significantly improved the operating performance of oil companies. In the booming new year, facing the uncertainty of oil price prospect and the tide of global green and low-carbon transformation, oil and gas giants hope to use good performance, high dividend and stock repurchase plan to let investors down.

The performance of "two barrels of oil" recovered rapidly: daily net income exceeded 500 million

In the first half of this year, the international oil price rebounded significantly, and the global oil and gas market recovered more obviously. Under the background of industry prosperity gradually rising, the domestic oil and gas giant's business performance is very bright.

In the first half of this year, PetroChina achieved a revenue of 1.2 trillion yuan, with a net profit of 53.037 billion yuan attributable to the shareholders of the parent company, which not only turned losses back on a year-on-year basis, but also achieved the best performance in the same period in nearly seven years; Sinopec achieved revenue of 1.26 trillion yuan, and the net profit attributable to the shareholders of the parent company was 39.153 billion yuan, making up losses on a year-on-year basis, the best result since 2018.

According to 181 days in the first half of the year, the net profit of "two barrels of oil" to the parent company totaled 92.19 billion yuan, with an average daily net income of 509 million yuan.

In the first half of 2020, due to the outbreak of the new crown in the world, the demand for fuel decreased sharply, and the international oil price experienced a sharp drop. Most of the oil giants around the world suffered heavy losses. "Two barrels of oil" once jointly made a huge loss of more than 52.8 billion yuan.

Today, with the recovery of the global economy and the over expected reduction of crude oil production by OPEC and its oil producing allies, the world oil supply is at a low level, the global crude oil market has reached a new balance, and the oil price has shown a steady upward trend.

In the first half of this year, the average spot price of Brent crude oil in the North Sea was 64.98 US dollars / barrel, up 62.7% year-on-year; The average spot price of West Texas Intermediate crude oil in the United States was US $62.22/barrel, up 70% over the same period last year.

At the same time, the global natural gas market demand recovered strongly, the three major markets in North America, Europe and Asia Pacific were in varying degrees of supply tension, the international natural gas prices rebounded sharply, and the spot prices of LNG in Europe and Northeast Asia continued to be high.

It is worth noting that, compared with the last round of sharp drop in oil prices, the recovery speed of "two barrels of oil" has accelerated significantly after this sharp drop in oil prices. This is related to the difference in the course of two rounds of oil price recovery, and also reflects the change of "two barrels of oil" in reducing cost, increasing efficiency and optimizing structure.

In July 2014, the price of WTI crude oil futures began to drop sharply from the high level of more than $100 / barrel, and fell below the $30 / barrel mark in January 2016. This round of oil price decline lasted for about a year and a half. After that, it took about two years to recover to the range of $70 / barrel to $80 / barrel in October 2018.

The oil price plummeted for more than three months at the beginning of 2020, and fell to a historical low in late April of that year; However, only two months later, the international oil price rose significantly from the bottom; By March 2021, oil prices had returned to above $60 / barrel, 11 months after the collapse of oil prices.

In addition, since the third quarter of 2020, with the rise of oil price, the "two barrels of oil" loss has been greatly narrowed, and by the end of the year, both have achieved profits. CNOOC, the offshore oil and gas giant, still made profits when oil prices plummeted last year. In the first half of 2021, the net profit reached 33.33 billion yuan, with a year-on-year increase of 221%.

Temptation of High Dividend: oil and gas business still makes money

In 2020, due to the impact of the "new crown" epidemic and the "negative oil price", multinational oil and gas giants have successively sold off assets, reduced debts and reduced expenditures, but they are still unable to escape the fate of losses.

Judging from the performance of multinational giants in the first half of this year, the dark moment in the oil and gas industry has passed. Multinational oil and gas giants such as BP, Royal Dutch Shell, Chevron and ExxonMobil, which lost money in succession last year, turned losses into profits in the first half of this year.

When the oil market returns to prosperity, the oil and gas industry is involved in new changes due to the changes of global policies. The global wave of green transformation and increasingly picky investors are becoming more and more important challenges for oil and gas giant business development.

The oil and gas business is still the most reliable and fast source of profit for the giants, while the profitability of the renewable energy business can not be compared with the oil and gas business at present. Even according to the transformation and development goals of international oil and gas companies, oil and gas will still be one of their most important business sectors in the next decade.

Multinational oil and gas giants with deep pockets want to attract investors with huge dividends and share buybacks: Although the prospect of fossil fuels is no longer optimistic, they are still making money.

In 2020, PetroChina will distribute a total of 32 billion yuan of dividends; Now, PetroChina has decided to pay an interim dividend of 23.866 billion yuan in 2021. Sinopec plans to distribute 19.371 billion yuan of cash dividends in the half year of 2021. According to the 2020 annual report, Sinopec has declared a total of 112.6 billion yuan of dividends in the three years from 2018 to 2020. In the first half of this year, Sinopec and PetroChina plan to pay a total of 43.237 billion yuan of interim dividends.

After last year's oil crisis, Royal Dutch Shell cut its dividend for the first time since World War II; But after oil prices picked up this year, shell raised its dividend by about 40% and launched a $2 billion share buyback plan, which is scheduled to be completed by the end of the year.

BP plans to buy back $1.4 billion in shares and raise its dividend by 4% to 5.46 cents; This year, total energy, Chevron and Statoil all announced share buyback plans. In the first half of the year, Saudi Aramco, the world's largest oil and gas industry, achieved a net profit of $47.2 billion, doubling year-on-year, and paying dividends of $18.8 billion in the second quarter.

Post oil and gas era: green transformation in progress

In the face of the global tide of green transformation, multinational oil giants can not stay away. Whether in order to win the favor of investors or prepare for the post oil and gas era in advance, real gold and silver have been put into the market. From selling assets to increasing the proportion of renewable energy, and even adjusting the business structure of the company, the oil and gas giants are showing their determination of green transformation in various ways.

What is slightly different is that the European oil and gas giants will accelerate the pace of oil removal, and Chinese companies will expand the development of new energy business on the basis of the main oil and gas industry.

At the mid-term performance conference in 2021, Dai Houliang, chairman of PetroChina, introduced that PetroChina will continue to lay out new energy, new materials and hydrogen energy businesses, and accelerate the pace of green and low-carbon transformation of the company; The general idea is to realize the situation that oil, natural gas and new energy will be divided into three parts by 2035.

Dai Houliang said that the company has the advantages of natural gas, and will play the role of "partner" of natural gas in the development of new energy business, and give full play to its complementary advantages with wind energy and solar energy resources; At the same time, New Energy Research Institute will be set up to study and apply new energy technology and CCUs technology, and give full play to the company's technical and talent advantages.

Last year, Sinopec put forward the vision of building the world's leading clean energy chemical company, to build an industrial pattern of "one base, two wings and three new", and accelerate the transformation to an integrated energy service provider of "oil, gas, hydrogen and electric service". Among them, hydrogen energy is the main direction of its new energy business, and Sinopec plans to build China's first hydrogen energy company.

During the 14th Five Year Plan period, Sinopec will plan to build 1000 hydrogenation stations, 5000 charging and exchanging power stations and 7000 distributed photovoltaic power stations.

According to BP's previous target, the company will transform from an international oil company focusing on production resources to a comprehensive energy company providing solutions for customers.

Over the next decade, BP plans to invest $5 billion a year in low-carbon areas, while reducing oil and gas production by 40% from 2019 levels. At present, BP has developed its offshore wind power, hydrogen energy, charging pile and biomass energy business.

In May this year, the French oil and gas giant Total officially renamed total energy, demonstrating its determination to promote strategic transformation. Its main business has also expanded from oil and gas to electric power, hydrogen energy, biomass energy and wind power photovoltaic fields.

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