Chevron to repurchase $75 billion in stock after record profit

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

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

While Chevron’s plan pales in comparison to the $89 billion Apple Inc. has allocated to takeovers over the past year, it is likely to win praise from critics who have accused the oil industry of profiting from the war after Russia’s invasion of Ukraine drove up energy prices.

President Joe Biden was among those who lambasted oil explorers for spending money on shareholder-friendly initiatives like dividends and buyouts instead of investing it in more drilling that would boost crude supplies. Chevron rose 3.9% in after-hours trading.

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

Even though energy prices have retreated since the early stages of Russia’s assault on Ukraine, analysts expect U.S. oil company earnings to remain strong as they rein in capex, unlike previous boom cycles. Instead, the windfall was 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 pledged to maintain the buyback rate even if commodity prices fell. With net debt ratios currently below the company’s target range, Chevron is prepared to let borrowing levels rise to continue repurchasing stock if necessary, Breber said last year.

Last year, the company said capital spending for 2023 would be at the high end of its guidance range, at $17 billion. Chevron is due to release its fourth quarter results on Jan. 27.

–With help from Tom Contiliano and Justin Sink.

(Updates with White House reaction, fifth paragraph.)

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