Thanks to soaring oil prices last year, Exxon Mobil Corp (NYSE:XOM), Chevron Corp (NYSE:CVX), Shell (LON:SHEL), TotalEnergies (NYSE:TTE) and BP (LON:BP) collectively earned nearly $200 billion, but concerns over slowing economic growth, falling natural gas prices, cost inflation and uncertainty over renewed oil demand in China are clouding the outlook in 2023, Bloomberg writes,

In the coming days, all of these 5 companies are expected to report combined earnings of $198.7 billion in 2022, up 50% from the previous annual record set more than 10 years ago.

With the large cash generated by the companies for the year, the entire industry can support dividend increases and share repurchases. Most importantly for shareholders: companies refrained from increasing spending as commodity prices rose, in stark contrast to previous cycles, and instead chose to pay down debt and boost investor returns: on Wednesday, Chevron announced $75 billion in share repurchases.

Commodity prices this year are down from record levels in 2022, but it’s still going to be a very strong year that could very well be the second best year in history for share buybacks.

Oil company profits in the fourth quarter, while among the highest on record, are likely to decline due to lower oil and gas prices.

Oil companies are now focused on returning record profits to shareholders while keeping costs under control.

Shares of the top 5 companies are up at least 18% since last February, despite an 11% drop in oil prices. The top ten S&P 500 stocks last year were all energy companies, and Exxon even rose 80% for its best annual performance on record. Oil companies are now generating about 10% of the index’s returns, despite representing only 5% of its market value.

The most important thing, analysts say, is whether they can stick to the shareholder return promises made last year during the prolonged rise in commodity prices.