Chevron Hikes Annual Stock Buyback Target To $17.5 Billion

By Tsvetana Paraskova of OilPrice.com

Chevron will raise its targeted annual share buyback rate to $17.5 billion, up from $15 billion, as it looks to grow shareholder distribution, the U.S. supermajor said on Tuesday.

High-return production growth supports growing shareholder distributions, Chevron said at its annual investor meeting today. At $60 a barrel Brent price, the company expects its annual free cash flow to grow by more than 10%. It is raising its share buyback guidance range to $10 billion to $20 billion per year and will raise its targeted annual share buyback rate to $17.5 billion starting in the second quarter.

In January, Chevron’s Board authorized a new $75 billion share repurchase program without a fixed expiration date, which immediately drew criticism from the White House.

White House Assistant Press Secretary Abdullah Hasan said, commenting on the news, “For a company that claimed not too long ago that it was ‘working hard’ to increase oil production, handing out $75 billion to executives and wealthy shareholders sure is an odd way to show it.”

[ZH: As a reminder, no lesser mortal than Warren Buffett recently opined that “when you are told that all repurchases are harmful to shareholders or to the country, or particularly beneficial to CEOs, you are listening to either an economic illiterate or a silver-tongued demagogue (characters that are not mutually exclusive).“]

In late January, Chevron reported its highest annual profit ever as its adjusted earnings for last year more than doubled from 2021 to hit $36.5 billion on the back of higher oil and gas prices and record U.S. production.

Chevron, the first of Big Oil to report fourth-quarter and full-year 2022 profits this earnings season, said that its 2022 adjusted earnings surged to $36.5 billion from earnings of $15.6 billion for 2021. Apart from record earnings, Chevron booked record annual cash flow from operations, at $49.6 billion, and free cash flow of $37.6 billion in 2022. The U.S. supermajor also saw its annual U.S. oil and gas production hit a record high.

Commenting on today’s announcement of increased annual buyback rates, Chevron’s CFO Pierre Breber said, “We have the capital discipline and balance sheet strength to offer a differentiated value proposition.”

“We’re winning back investors with consistent and growing cash returned to shareholders across the commodity price cycle.”