Chevron Corp. wants to buy back $75 billion worth of shares and raise dividends after making record profits last year. Politicians around the world were angry about this because rising energy prices were hurting consumers.
The stock repurchase program will start on April 1, and the company said in a statement Wednesday that it will be three times as big as the last one, which was announced at the start of 2019. The program is equal to almost a quarter of the market value of the company and five times the current amount of buybacks each year.
Even though Chevron’s plan isn’t as big as the $89 billion that Apple Inc. put toward repurchases in the last year, it’s likely to anger people who have said that the oil industry is making money off of war after Russia’s invasion of Ukraine drove up energy prices.
President Joe Biden was one of the people who criticized oil explorers for putting money into shareholder-friendly projects like dividends and buybacks instead of more drilling, which would increase crude supplies. Chevron’s stock went up as much as 3.9% after the market closed.
“Giving $75 billion to executives and wealthy shareholders is an odd way to show that a company is ‘working hard’ to increase oil production,” Abdullah Hasan, a White House spokesman, said in a statement on Wednesday night. “We keep asking oil companies to use their record profits to make more oil available and lower prices for Americans.”
The company will also give investors a dividend of $1.51 per share on March 10. This is a 6.3% increase from the last quarter.
Capital Squeeze
Chevron raised its budget for 2023, but it’s still a long way below what it was in the past. Even though energy prices have gone down since the beginning of Russia’s attack on Ukraine, analysts think that US oil companies will still make a lot of money because, unlike in previous booms, they haven’t spent too much on capital. Instead, the money was used to pay off debt and give investors a better return.
Last year, as oil prices went up, Chevron raised the rate at which it bought back shares more than once. However, Chief Financial Officer Pierre Breber has promised to keep the rate the same even if commodity prices go down. As of last year, Breber said that Chevron was willing to keep buying back shares even if borrowing levels went up because the company’s net debt ratios were below the target range.
Last year, the company said that its capital spending for 2023 will be $17 billion, which is at the high end of its guidance range. On January 27, Chevron will talk about its fourth-quarter results.
