Chevron to buy back $75 billion in shares after record profit

Chevron to buy back $75 billion in shares after record profit

(Bloomberg Opinion) — Chevron Corp. plans to buy back $75 billion in shares and increase dividend payments after a year of record profits that drew angry denunciations from politicians around the world as soaring energy prices squeezed the the consumers.

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The share buyback program will begin on April 1 and will triple the size of the previous authorization submitted in early 2019, the company said in a statement on Wednesday. The program is equivalent to nearly a quarter of the company’s market value and five times the current level of annual buybacks.

Though Chevron’s plan pales in comparison to the $89 billion Apple Inc. allocated to buybacks last year, it is likely to infuriate critics who accused the oil industry of war profiteering after the Russian invasion. of Ukraine pushed up energy prices.

President Joe Biden was among those who criticized oil explorers for devoting cash to shareholder-friendly initiatives such as dividends and buybacks, rather than investing it in more drilling that would boost crude supplies. Chevron rose as much as 3.9% in after-hours trading.

“For a company that claimed not long ago that it was ‘working hard’ to increase oil production, handing out $75 billion to wealthy executives and shareholders is an odd way to show it,” said Abdullah Hasan, a White House spokesman. in a statement Wednesday night. “We continue to call on oil companies to use their record profits to increase supply and lower costs for the American people.”

The company will also pay investors a dividend of $1.51 per share on March 10, an increase of 6.3% from the previous quarter.

Although energy prices have receded since the early phases of Russia’s assault on Ukraine, analysts expect US oil company earnings to remain strong because they have reined in capital spending, unlike in previous boom cycles. Instead, the windfall has been used to pay down debt and boost returns for investors.

Chevron increased share buybacks several times last year as oil prices rose, but Chief Financial Officer Pierre Breber has vowed to maintain the buyback rate even as commodity prices recede. With net debt ratios currently below the company’s target range, Chevron is willing to let debt levels rise to continue buying back shares if necessary, Breber said last year.

Last year, the company announced that capital spending for 2023 will be at the high end of its guidance range at $17 billion. Chevron is scheduled to report fourth quarter results on January 27.

–With assistance from Tom Contiliano and Justin Sink.

(Updates with reaction from the White House, in the fifth paragraph.)

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