Oil and Gas Companies Profit from War: Record 282 Trillion Won Net Income in 6 Months

[Photo by Reuters Yonhap News]

[Asia Economy Reporter Byunghee Park] On February 24 (local time), an analysis revealed that oil and gas companies earned a record-breaking net profit exceeding $200 billion in just six months following the outbreak of the Ukraine war.

According to major foreign media on the 6th, S&P Global Commodity Insights estimated that publicly traded oil and gas companies operating in the United States posted a total net profit of $200.24 billion (approximately 282 trillion KRW) in the second and third quarters of this year. S&P aggregated the net profits of all oil and gas companies, including major oil majors such as ExxonMobil and BP from the US and Europe, as well as small private shale companies.

According to S&P, the total net profit of oil and gas companies in the second and third quarters is the highest ever for a six-month period. Accordingly, S&P expects that the net profit of oil and gas companies this year will also reach an all-time high.

The controversy over windfall taxes is expected to intensify due to the massive net profits of oil and gas companies.

U.S. President Joe Biden said last week that oil and gas companies are enjoying windfall profits due to the war, and if these companies do not increase production to lower energy prices, he will demand Congress impose higher taxes on them.

In the market, there is speculation that oil and gas companies will focus more on expanding shareholder returns rather than investing to increase production as President Biden requested. It is highly likely that the surged profits will be used for share buybacks or dividend payments.

Investment bank Raymond James predicted that capital expenditures of 50 major oil and gas companies this year will be about $300 billion. This is only half the level of 2013, when oil prices were similar to current levels.

Pavel Molchanov, an analyst at Raymond James, said, "Over the past five years, oil and gas companies have prioritized return of capital desired by shareholders over drilling for production," adding, "Corporate dividends and share buybacks have never been this generous."

ExxonMobil CEO Darren Woods said, "We must seriously consider ways to directly return the massive profits to the American people."

Rick Muncrief, CEO of Devon Energy, a major U.S. shale drilling company, also said, "We are prioritizing value creation sharing over production."

This content was produced with the assistance of AI translation services.