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.
Imaginima | E+ | Getty Images
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.
Nurphoto | Nurphoto | Getty Images
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.
Sam Altman, chief executive officer of OpenAI Inc., during a media tour of the Stargate AI data center in Abilene, Texas, US, on Tuesday, Sept. 23, 2025.
Kyle Grillot | Bloomberg | Getty Images
OpenAI has finalized a secondary share sale totaling $6.6 billion, allowing current and former employees to sell stock at a record $500 billion valuation, according to a person familiar with the transaction.
Bloomberg was first to report that the deal had closed.
CNBC reported in August that OpenAI was looking to conduct a secondary share sale at a valuation of $500 billion, with investors including Thrive Capital, SoftBank, Dragoneer Investment Group, Abu Dhabi’s MGX, and T. Rowe Price.
While OpenAI had authorized up to $10.3 billion in shares for sale — an increase from the original $6 billion target — only about two-thirds of that amount ultimately changed hands.
The person briefed on internal discussions said that lower participation is being viewed internally as a vote of confidence in the company’s long-term prospects, and a sign that investor appetite remains strong, even at a $500 billion valuation — up sharply from $300 billion earlier this year.
The offer was presented to eligible current and former employees in early September, with participation open to those who had held shares for more than two years.
The share sale marks OpenAI’s second major tender offer in less than a year, following a $1.5 billion deal with SoftBank in November.
This latest transaction cements OpenAI’s status as the world’s most valuable privately held company, surpassing SpaceX’s valuation of $456 billion.
The sale also comes amid intensifying competition for AI talent. Meta, in particular, has reportedly offered nine-figure compensation packages in a bid to recruit top researchers.
OpenAI is among a growing cohort of high-profile startups — including SpaceX, Stripe, and Databricks — using secondary sales that allow employees to cash out while staying private. The move is widely seen as a strategy to retain talent and reward long-term employees without pursuing an IPO.
WATCH: OpenAI’s $850 billion buildout contends with grid limits
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Solar and wind accounted for 90% of new US electrical generating capacity added in the first seven months of 2025, according to data just released by the Federal Energy Regulatory Commission (FERC). In July, solar alone provided 96% of new capacity, making it the 23rd consecutive month solar has held the lead among all energy sources.
Solar’s new generating capacity in July and YTD
In its latest monthly “Energy Infrastructure Update” report (with data through July 31, 2025), which was reviewed by the SUN DAY Campaign, FERC says 46 “units” of solar totaling 1,181 megawatts (MW) were placed into service in July, accounting for over 96.4% of all new generating capacity added during the month.
The 434 units of utility-scale (>1 MW) solar added during the first seven months of 2025 total 16,050 MW and were 74.4% of the total new capacity placed into service by all sources.
Solar has now been the largest source of new generating capacity added each month for 23 consecutive months from September 2023 to July 2025. During that period, total utility-scale solar capacity grew from 91.82 gigawatts (GW) to 153.09 GW. No other energy source added anything close to that amount of new capacity. Wind, for example, expanded by 10.68 GW, while natural gas increased by just 3.74 GW.
Renewables were 90% of new capacity added YTD
Between January and July, new wind provided 3,288 MW of capacity additions – significantly more than the new capacity provided by natural gas (2,207 MW). Wind thus accounted for 15.2% of all new capacity added during the first seven months of 2025.
For the same period, the combination of solar and wind (plus 4 MW of hydropower and 3 MW of biomass) was 89.6% of new capacity, while natural gas provided just 10.2%; the balance came from coal (18 MW), oil (17 MW), and waste heat (17 MW).
Solar + wind are 23.23% of US utility-scale generating capacity
Utility-scale solar’s share of total installed capacity (11.42%) is now almost equal to that of wind (11.81%). Taken together, they constitute 23.23% of the US’s total available installed utility-scale generating capacity.
Moreover, at least 25-30% of US solar capacity is in the form of small-scale (e.g., rooftop) systems that are not reflected in FERC’s data. Including that additional solar capacity would bring the share provided by solar + wind to more than a quarter of the US total.
With the inclusion of hydropower (7.61%), biomass (1.07%), and geothermal (0.31%), renewables currently claim a 32.22% share of total US utility-scale generating capacity. If small-scale solar capacity is included, renewables are now more than one-third of total US generating capacity.
Solar still on track to become No. 2 source of US generating capacity
FERC reports that net “high probability” additions of solar between August 2025 and July 2028 total 92,631 MW – an amount more than four times the forecast net “high probability” additions for wind (22,528 MW), the second fastest-growing resource.
FERC also foresees net growth for hydropower (579 MW) and geothermal (92 MW) but a decrease of 131 MW in biomass capacity.
Taken together, the net new “high probability” capacity additions by all renewable energy sources over the next three years – the bulk of the Trump Administration’s remaining time in office – would total 115,120 MW.
There are now 35 MW of new nuclear capacity in FERC’s three-year forecast, while coal and oil are projected to contract by 25,017 MW and 1,576 MW, respectively. Natural gas capacity would expand by just 8,276 MW.
Should FERC’s three-year forecast materialize, by mid-summer 2028, utility-scale solar would account for more than 17% of installed U.S. generating capacity – more than any other source besides natural gas (40%). Further, the capacity of the mix of all utility-scale renewable energy sources would exceed 38%. Inclusion of small-scale solar systems would push renewables ahead of natural gas.
“With one month of Trump’s ‘One Big Beautiful Bill’ now under our belts, renewables continue to dominate capacity additions,” noted the SUN DAY Campaign’s executive director, Ken Bossong. “And solar seems poised to hold its lead in the months and years to come.”
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