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The companies raised spending on share repurchases by 2,182% in the fourth quarter from the year-earlier period, handily beating the second-place 279% increase by financial firms. The energy industry accounted for 2.8% of a record $881.7 billion in buybacks in all of 2021.
The rapid increase in energy buybacks came before this year’s 28% increase in West Texas Intermediate crude oil prices, though energy costs had started to increase in May of 2020. The jump in prices and buybacks represents a bonanza for shareholders, though not necessarily for the long-term industry prospects.
Read more: Energy Firms Pay Record Prices to Buy Own Shares as Oil Booms
“Buybacks artificially inflate earnings per share and return-on-asset and capital metrics, but the underlying health of an E&P’s operations doesn’t improve,” Bloomberg Intelligence analyst Vincent Piazza wrote in a note.
©2022 Bloomberg L.P.
