By Sheila Dang
HOUSTON (Reuters) -When Exxon Mobil and Chevron report first-quarter results this week, investors will be focused on how falling oil prices have increased the risk to dividends and share repurchases for the rest of 2025.
Big Oil has made returning cash to investors through dividends and share repurchases a strategic cornerstone of its efforts to woo Wall Street. U.S. President Donald Trump’s global tariff announcements have stoked fears of a recession and weaker oil demand, prompting forecasters to lower their oil price outlooks.
Lower prices would give Big Oil less cash to distribute to shareholders.
“We think the quarterly results will be overshadowed by the forward outlook given the commodity market turmoil,” wrote Paul Cheng, an analyst at Scotiabank, in a research note.
Investors will look for companies to describe how they plan to cope with sustained lower oil prices, potentially paring share repurchases, cutting spending on projects or tapping into cash stockpiles, analysts said in research notes this month.
Exxon and Chevron, the two largest U.S. oil producers, report on Friday and both are expected to post a rise in profit from the fourth quarter. Analysts expect profit of $1.73 per share for Exxon and $2.18 per share for Chevron, according to LSEG data.
Global benchmark Brent crude prices averaged $74.98 a barrel during the January-March quarter, up 1.3% from the previous quarter. U.S. natural gas prices rose 30%.
On April 2, oil prices began a free fall after Trump announced tariffs on trading partners.
Oil is now hovering around $66 a barrel, prompting analysts to model scenarios where prices remain in the $60s this year or even decline into the $50s.
So far in April, Brent prices have averaged $66.79 a barrel. During the month, the U.S. Energy Information Administration sharply cut its price outlook from an average of $74.22 per barrel to $67.87 in 2025. For 2026, the EIA now expects an average price of $61.48 per barrel, down from $68.47.
Chevron may reduce buybacks if weak oil prices persist, said analysts from four firms. The second-largest U.S. oil company previously guided annual share repurchases between $10 billion and $20 billion.
The company is in the process of cutting up to $3 billion in costs and laying off up to 8,000 employees.
UK-based BP, may be forced to cut share buybacks as well, analysts said, which would increase pressure on its already underperforming shares.
Chevron requires a Brent price of $95 per barrel to cover dividends and buybacks compared to $88 for Exxon, according to RBC Capital Markets. Both companies can cover dividends alone with prices in the mid $50s.
