Chevron leverages higher oil prices for more share buybacks

Kevin Crowley December 02, 2021

HOUSTON (Bloomberg) - Chevron Corp. boosted its planned share buyback to as much as $5 billion per year, as the oil giant uses higher commodities prices to step up returns to investors rather than investing in production growth.

The repurchases are now seen at $3 billion to $5 billion a year, about 60% higher than previous guidance, the company said Wednesday in a statement. Capital spending next year will be $15 billion, the low end of a previous forecast and 25% below pre-pandemic levels.

The California-based oil giant generated the most free cash flow in its 142-year history during a third quarter in which oil and gas prices surged. But the company is wary of plowing that cash back into new production at a time when crude prices have sharply pulled back and the emergence of the omicron variant raises concerns about global oil-demand recovery.

The budget reflects “Chevron’s enduring commitment to capital discipline,” Chief Executive Officer Mike Wirth said in the statement. It’s “at a level consistent with plans to sustain and grow the company as the global economy continues to recover.”

Despite the tight purse strings, Chevron will spend $3 billion this year in the Permian, the world’s largest shale basin in West Texas and New Mexico. That’s a 50% increase from last year’s budget and a sign of the basin’s growing importance within 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 spent on low carbon investments. Chevron stock climbed 0.3% to $112.45 a share at 5:28 p.m. in after-hours trading in New York.

Connect with World Oil
Connect with World Oil, the upstream industry's most trusted source of forecast data, industry trends, and insights into operational and technological advances.