Chevron is catching heat for tripling its stock buyback to $75 billion as soaring energy prices led to record profits
Mike Blake/Reuters
- Chevron wowed investors with a massive $75 billion stock buyback on Wednesday.
- The buyback has no expiration date and at current prices would retire about 20% of the company's outstanding shares.
- Chevron has caught some criticism from the White House for the move.
Chevron jumped 4% on Thursday after the oil giant launched a massive $75 billion stock buyback program and increased its quarterly dividend 6% to $1.51 per share, with the move drawing some ire from the White House amid its requests for domestic oil companies to increase output to offset supply pressures.
The stock buyback program has no expiration date and is triple the company's prior share repurchase program of $25 billion. The buyback is so big, that at Chevron's current stock price, it would retire about 20% of the company's outstanding shares.
Surging oil prices in 2022 helped fuel record profits for Chevron, and the company expects those profits to continue to flow in 2023.
But the oil company's stock buyback program is catching heat from the White House, which has urged domestic oil companies to boost production to help offset the price increases that were sparked by Russia's invasion of Ukraine.
Gas prices have fallen considerably since peaking around $5 per gallon in 2022, with the current average US gas price closer to $3.50, according to data from AAA.
"For a company that claimed not too long ago that it was 'working hard' to increase oil production, handing out $75 billion to executives and wealthy shareholders sure is an odd way to show it," White House spokesperson Abdullah Hasan said.
But Chevron is working to increase its oil production in 2023. The company announced planned organic capital expenditures of $14 billion and affiliate investments of $3 billion this year, representing a year-over-year increase of more than 25%. Part of those investments include $2 billion for lower carbon investments.
"We're maintaining capital discipline while investing to grow both traditional and new energy supplies," Chevron Chairman and CEO Mike Wirth said in a statement last month.
Chevron and ExxonMobil appear to have learned from their mistakes during the shale oil boom and bust back in the 2010s. That period was filled with a rush to boost production at the expense of profits and shareholder returns, which ultimately led to a six-year bear market in oil prices that crushed the energy sector.
The capital discipline employed by Chevron is also being employed by ExxonMobil, which increased its stock buyback program to $50 billion last month.
Contributer : Business Insider https://ift.tt/W5d3mT8
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Friday, January 27, 2023
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