Chevron pledges $75 billion for share buybacks as cash grows
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[January 26, 2023] By
Sabrina Valle
(Reuters) - Chevron Corp on Wednesday said it would triple its budget
for share buybacks to $75 billion, the oil industry's most ambitious
shareholder payouts to date, as high oil and gas prices pad profits.
The oil industry has been facing calls from investors and the White
House to put last year's record earnings from sky high energy prices
into more drilling, acquisitions, or to reduce prices for consumers.
Chevron on Friday is expected to report profits for 2022 doubled to
$37.2 billion, according to estimates by Refinitiv. It has budgeted $17
billion on new oil and gas projects this year, up $2 billion from last
year.
Chevron's disclosure of the share buyback and a 6% increase in its
quarterly shareholder dividend signaled it will allocate a big chunk of
its profits to reward shareholders. It did not set a timetable for the
buybacks.
Chevron and Exxon Mobil are poised to post record annual profits for
2022 of nearly $100 billion combined, analysts forecast.
Those unprecedented earnings led analysts at Citi on Wednesday to ask if
one of the two might buy BP, Shell or TotalEnergies.
U.S. oil producers overall are increasing their budgets for new energy
projects this year, but the expenditures will be dwarfed by the amounts
paid to shareholders.
The White House criticized the move in a statement. Last year the
administration of President Joe Biden called for oil producers to
instead invest in production to reduce energy prices for consumers and
raise investments in renewable energy.
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The logo of Chevron is seen at the
company's office in Caracas, Venezuela April 25, 2018. REUTERS/Marco
Bello
“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,"
said White House spokesperson Abdullah Hasan.
The U.S. oil majors' valuations are about 40% above European rivals,
Citi said. BP's market value is about $108 billion, compared to
Chevron's $346 billion and Exxon's $466 billion.
Exxon Mobil, which led shareholder returns among oil majors last
year, last month increased its buyback plan to $50 billion through
2024.
Chevron's buyback plan is smaller than those for large technology
companies such as Apple. As of September, Apple has authorized $405
billion in buybacks and repurchased more than $90 billion in shares
during the previous 12-month period.
Chevron shares rose almost 3% in after-market trade.
The energy industry last year was one of the top sectors in the S&P
500 index after trailing the broader market for years.
(Reporting by Sabrina Valle in Houston, additional reporting by
Steve Holland in Washington; Arshreet Singh; Editing by Maju Samuel,
Daniel Wallis, Chris Reese and Christian Schmollinger)
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