Chevron capitalizes on rising oil prices for more share buybacks
Through Kevin crowley to 12/2/2021
HOUSTON (Bloomberg) – Chevron Corp. has increased its share buyback plan to $ 5 billion a year, as the oil giant uses higher commodity prices to boost investor returns rather than investing in output growth.
Buybacks are now estimated at $ 3 billion to $ 5 billion per year, about 60% more than previous forecasts, the company said in a statement on Wednesday. Capital spending next year will be $ 15 billion, the low of a previous forecast and 25% below pre-pandemic levels.
The California oil giant generated the most free cash flow in its 142-year history in a third quarter in which oil and gas prices soared. But the company is reluctant to reinvest that money in new production at a time when crude prices have fallen sharply and the emergence of the omicron variant is raising concerns about the recovery in global demand for oil.
The budget reflects Chevron’s “enduring commitment to capital discipline,” CEO Mike Wirth said in the statement. This is “at a level consistent with plans for sustaining and growing the company as the global economy continues to recover.”
Despite tight purse strings, Chevron will spend $ 3 billion this year in the Permian, the world’s largest shale basin in western Texas and New Mexico. That’s a 50% increase over last year’s budget and a sign of the basin’s growing importance to Chevron’s overall portfolio. About $ 2 billion goes to the giant Tengiz project in Kazakhstan.
Some $ 800 million, or 5% of the total budget, will be devoted to low-carbon investments. Chevron stock climbed 0.3% to $ 112.45 a share at 5:28 pm after-hours trading in New York.