Bye-bye buybacks? Big Oil’s record-breaking shareholder payouts are under threat
Oil prices held near two-week highs in early trading on Wednesday, supported by an agreement between the U.S. and China to temporarily lower their reciprocal tariffs and a falling U.S. dollar.
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A protracted slump in crude prices has ramped up the pressure on Big Oil’s commitment to allocate cash to shareholders.
Western energy supermajors have long sought to return cash to investors through buyback programs and dividends to keep their shareholders happy. Energy executives have also expressed confidence that they can continue to reward investors following a relatively robust set of first-quarter earnings.
Some analysts, however, are less convinced about Big Oil’s pledge to return ever-higher shareholder returns, citing already stretched balance sheets and a sharp drop in crude prices.
Oil prices have fallen more than 12% year-to-date amid persistent demand concerns and U.S. President Donald Trump’s back-and-forth trade policy.
Espen Erlingsen, head of upstream research at consultancy Rystad Energy, said recent market volatility has left the energy majors with “few economically attractive options” that allow for reinvestment while maintaining a competitive capital returns framework.
“As companies like Shell and ExxonMobil continue to push ahead with large-scale buyback programs despite shrinking cash inflows, the durability of these strategies is in question. For now, the majors are holding the line. But if oil prices remain depressed, adjustments may be inevitable,” Erlingsen said in a research note published Thursday.
Share buybacks, which are typically more flexible than dividends, are “likely to be the first lever pulled,” he added. In that vein, weaker crude prices mean energy majors will have less cash to return to shareholders.
BP logo is seen at a gas station in this illustration photo taken in Poland on March 15, 2025.
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Investor concern over the sustainability of Big Oil’s shareholder returns comes after a year of record-breaking payouts.
Analysts at Rystad said total shareholder rewards from the likes of Shell, BP, TotalEnergies, Eni, Exxon Mobil and Chevron climbed to a whopping $119 billion in 2024, beating the previous record set in 2023.
The payout ratio, which refers to shareholder payouts as a share of corporate cash flow from operations (CFFO), meanwhile jumped up to 56% last year, Rystad said. That was well above the 30% to 40% range that was typical for the industry from 2012 through to 2022, the analysts added.
If shareholder payouts were to remain at 2024 levels throughout 2025, Rystad said this would imply companies distribute more than 80% of their cash flow to investors. The estimate was based on Big Oil’s first-quarter CFFO as a proxy for full-year performance.
Point of maximum weakness
For European majors, analysts at Bank of America said at the start of the year in a note entitled “bye-bye buybacks?” that it anticipated cuts in such returns, from companies whose balance sheets were already stretched.
The Wall Street bank cited BP, Repsol and Eni at the time. It added that only Shell, TotalEnergies and Equinor were among the regional players likely to keep their respective 2025 buyback run-rates intact.
Spokespersons for Repsol and Eni were not immediately available to comment when contacted by CNBC.
So far, BP is the only European energy major to have trimmed its buyback run-rate. The beleaguered British oil company last month posted a sharp fall in first-quarter profit and reduced its share buyback to $750 million, down from $1.75 billion in the prior quarter.
BP, which has been the subject of intense takeover speculation, also reported significantly lower cash flow and rising net debt for the first quarter.
Lydia Rainforth, head of European energy, equity research at Barclays, said BP’s future appears to be “really bright” — on the condition that the company can get through the next six months.
“If I think about when is that point of maximum weakness for BP, it is over the next six months, ultimately. Debt continues to go up a little bit, production continues to fall until mid-2026,” Rainforth told CNBC’s Steve Sedgwick on Thursday.
“As I get towards the end of the year, hopefully we’ll see that sum of divestments taking down debt. Things like … selling their lubricants business, that could raise between $12 billion to $15 billion. It brings down debt, you start to see the benefit of cost savings coming through, and then production growth starts kicking in next year,” she added.
Shares of USA Rare Earth jumped in extended trading Thursday, after CEO Barbara Humpton told CNBC that the rare earth miner is “in close communication” with the White House.
Humpton’s comment comes after the Trump administration took a 5% equity stake in Lithium Americas this week. The Defense Department took a 15% stake in rare earth miner MP Materials in July.
“We are in close communication with the administration,” Humpton told CNBC’s Morgan Brennan when asked whether USA Rare Earth was interested in a deal with the Trump administration.
USA Rare Earth stock year to date.
USA Rare Earth shares were last up about 8% after hours. Its stock gained 23% in regular trading Thursday and has nearly doubled this year.
“This is a field where it will not be a zero sum game,” Humpton said of the rare earth supply chain. “It’s going to take a lot of players to build out this marketplace.”
USA Rare Earth is developing a mine in Sierra Blanca, Texas, and a magnet production facility in Stillwater, Oklahoma. Humpton said she supports the Trump administration’s deals with MP and Lithium Americas.
“What we’re doing is keeping the administration informed of our own plans,” she said.
The adminstration has said it is making the investments to help support the industry and break U.S. dependence on China.
Environment
Tesla applies for patent to make Cybertruck look even more ridiculous but more efficient
Tesla has applied for a new patent that would make the Cybertruck look even more ridiculous than it already does, but it would also make towing more efficient.
The Cybertruck is one of, if not the most, polarizing vehicles of all time, and its design is primarily to blame.
Much of the design is due to the use of stainless steel panels and the attempt to make pickup trucks more aerodynamically efficient.
Tesla has managed to improve on the drag coefficient of the average pickup truck.
However, it doesn’t help much with towing a trailer, which is going to catch a lot of that drag.
Tesla has now applied for a new patent on a device that would help push wind over a trailer towed by the Cybertruck.
The American automaker wrote in the abstract of the patent application:
An inflatable aerodynamic deflector to reduce drag and enhance efficiency. Constructed from drop stitch material, it forms one or more air chambers between parallel skins. The component includes a pressure regulation mechanism and diverse attachment interfaces such as rail systems, magnetic fasteners, and quick disconnect clips, distributed along the vehicle for secure mounting. This component acts as an aerodynamic deflector, optimizing airflow around conveyances, especially combination vehicles like tow vehicles and trailers.
In short, Tesla is working on an inflatable device that could sit on the bed of the Cybertruck and rise to close the air gap between the truck, thereby extending the angle of the windshield over the trailer.
Here are some of the drawings from the patent application
Electrek’s Take
To be fair, companies often apply for patents on products that they don’t have concrete plans to bring to production, and this could easily be the case here.
That’s especially true for the Cybertruck.
The program is so much smaller than Tesla anticipated, and with smaller volumes, it makes less sense to launch accessories.
That said, I’m pro everything that makes driving more efficient, regardless of whether it makes a vehicle silly.
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The 2026 Hyundai Kona Electric lineup will be offered in a single trim, but at least it’s the most affordable one.
Here’s the new 2026 Hyundai Kona Electric lineup
With the IONIQ 5 stealing the spotlight, Hyundai is downsizing the 2026 Kona Electric to just one trim — the base SE model.
Hyundai didn’t provide prices, but the 2025 Hyundai Kona Electric SE was the brand’s most affordable EV, starting at just $32,975. The SEL, Limited, and N Line trims will not be offered for the 2026 model year.
In another blow, Hyundai is also dropping the Long Range battery, meaning the 2026 Kona Electric will only be available with the Standard Range battery.
The Long Range 64.8 kWh battery offers a driving range of up to 261 miles, while the Standard Range 48.6 kWh battery delivers a driving range of just 200 miles. The only other change is that the SE trim will now include a larger console tray.
With new models arriving, like the 2026 Nissan LEAF and the 2027 Chevy Bolt EV, the Kona Electric will no longer be one of the few EVs starting under $35,000.
Nissan claims the 2026 LEAF “has the lowest starting MSRP for any new EV currently on sale in the US” at just $29,990. The new LEAF also offers significantly more range, with over 300 miles, and features a NACS port for recharging at Tesla Superchargers.
While it’s cutting the Kona Electric lineup, Hyundai appears to be focused on its top-selling EV for 2026, the IONIQ 5.
Following the expiration of the federal EV tax credit, Hyundai reduced prices on the 2026 IONIQ 5 by up to nearly $10,000 on certain trims. The 2026 IONIQ 5 now starts at just $35,000. It’s also extending the $7,500 credit for 2025 models.
Is the Kona Electric on its way out with the IONIQ 5 now available for about the same price? Either that, or Hyundai will have to cut prices on the Kona EV to stay competitive.
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