Chevron buys back 75 billion of stock after record profit

Chevron buys back $75 billion of stock after record profit

(Bloomberg) — Chevron Corp. plans to buy back $75 billion of stock and increase dividend payouts after a year of record earnings that sparked angry denunciations from politicians around the world as rising energy prices squeezed consumers.

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The share buyback program begins April 1 and will be three times larger than the prior authorization unveiled in early 2019, the company said in a statement Wednesday. The program represents nearly a quarter of the company’s market value and five times current annual buybacks.

Though Chevron’s plan pales in comparison to the $89 billion Apple Inc. earmarked for buybacks last year, it’s likely to anger critics who accuse the oil industry of wartime profits after Russia’s invasion of Ukraine sent energy prices skyrocketing has driven.

President Joe Biden was among those who berated oil explorers for spending money on shareholder-friendly initiatives like dividends and buybacks instead of pouring it into more drilling that would swell crude stocks. Chevron is up as much as 3.9% in after-hours trading.

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

The company will also pay investors a dividend of $1.51 per share on March 10, up 6.3% sequentially.

Although energy prices have fallen since the early stages of Russia’s attack on Ukraine, analysts expect US oil company earnings to remain strong as they have kept capital spending in check in contrast to previous boom cycles. Instead, the windfall has been used to pay off debt and boost investor returns.

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Chevron increased its share buybacks several times last year as oil prices rose, but chief financial officer Pierre Breber has pledged to maintain the buyback rate even if commodity prices fall. With net debt ratios currently below the company’s target range, Chevron is poised to increase borrowing to continue buying back shares if needed, Breber said last year.

The company announced last year that 2023 capital expenditures will be at the high end of its guidance range of $17 billion. Chevron is expected to report fourth-quarter results on Jan. 27.

–Assisted by Tom Contiliano and Justin Sink.

(Updates with White House response, fifth paragraph.)

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