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At its annual investor meeting in New York, Chevron Corporation (CVX - Free Report) earmarked plans to boost shareholder returns while continuing with its capital discipline and working through an energy transition.
According to the presentation, the U.S. oil major promised anything between $5 billion and $10 billion worth of buybacks each year. At the midpoint, that’s almost double the previous range of $3 billion to $5 billion. Management’s commitment to pledge more money to shareholders highlights surging oil and gas prices that have allowed CVX to harvest bumper profits. The San Ramon, CA-based company followed its ‘Big Oil’ peers ExxonMobil (XOM - Free Report) , Shell plc (SHEL - Free Report) and BP plc (BP - Free Report) in rewarding investors handsomely after years of measly returns.
In January, America’s biggest energy firm ExxonMobil broke its long hiatus and initiated share repurchases, with plans to buy back up to $10 billion over the next 12 to 24 months. As for Europe’s leading oil company Shell, it announced plans to buy back $8.5 billion worth of shares in the first half of this year, including the recent pledge to return $5.5 billion from the Permian sale proceeds. Continental rival BP, meanwhile, intends to execute an additional $1.5 billion of share repurchases ahead of its first-quarter results announcement.
As profits soar to multi-year highs, the likes of Chevron, ExxonMobil, Shell and BP are looking to perk up investor returns, well supported by their balance sheet strength. For example, CVX had $5.6 billion in cash and cash equivalents and total debt of $31.4 billion with a debt-to-total capitalization of just 18.4% as of Dec 31.
Coming back to Chevron’s investor day, the company reiterated holding annual capital spending through 2026 in the range of $15 billion to $17 billion, some 50% lower than peak levels. The only energy component of the Dow Jones Industrial Average also emphasized on cutting 2026 operating expenses per barrel in excess of 10% from the 2021 levels.
CVX’s lowered expenditure needs will increase its operating cash flow on a per-share basis by 10% every year till 2026 assuming $60 Brent. Investors should know that the international benchmark is now trading at an eight-year high of more than $110 per barrel. Considering this buffer, CEO Michael Wirth assured that the buybacks will continue even if oil prices dip.
Compared to previous instances of commodity price upturns, when CVX prioritized spending on mega-projects to augment output, shareholder returns are its primary focus now. Nevertheless, Chevron aims to grow production by around 13% from 2021 levels to more than 3.5 million barrels a day by 2026 – mostly from the Permian Basin and the Tengiz project in Kazakhstan.
Last but not the least, the company has accelerated efforts to lower carbon intensity and is progressing toward its 2030 goals. As part of that initiative, it recently acquired biodiesel producer, Renewable Energy Group for $3.15 billion in an all-cash deal. Chevron’s existing renewable fuel partnership with Bunge, together with Renewable Energy Group’s biodiesel production facilities, will transform the energy behemoth into one of the largest North American renewable fuels producers.
Considering these rafts of positive updates, if you want to capitalize on oil’s bull run, Chevron might be the stock to place your bets on. The company currently carries a Zacks Rank #2 (Buy).
Image: Bigstock
Chevron (CVX) Holds Annual Investor Meeting: Key Takeaways
At its annual investor meeting in New York, Chevron Corporation (CVX - Free Report) earmarked plans to boost shareholder returns while continuing with its capital discipline and working through an energy transition.
According to the presentation, the U.S. oil major promised anything between $5 billion and $10 billion worth of buybacks each year. At the midpoint, that’s almost double the previous range of $3 billion to $5 billion. Management’s commitment to pledge more money to shareholders highlights surging oil and gas prices that have allowed CVX to harvest bumper profits. The San Ramon, CA-based company followed its ‘Big Oil’ peers ExxonMobil (XOM - Free Report) , Shell plc (SHEL - Free Report) and BP plc (BP - Free Report) in rewarding investors handsomely after years of measly returns.
In January, America’s biggest energy firm ExxonMobil broke its long hiatus and initiated share repurchases, with plans to buy back up to $10 billion over the next 12 to 24 months. As for Europe’s leading oil company Shell, it announced plans to buy back $8.5 billion worth of shares in the first half of this year, including the recent pledge to return $5.5 billion from the Permian sale proceeds. Continental rival BP, meanwhile, intends to execute an additional $1.5 billion of share repurchases ahead of its first-quarter results announcement.
As profits soar to multi-year highs, the likes of Chevron, ExxonMobil, Shell and BP are looking to perk up investor returns, well supported by their balance sheet strength. For example, CVX had $5.6 billion in cash and cash equivalents and total debt of $31.4 billion with a debt-to-total capitalization of just 18.4% as of Dec 31.
Coming back to Chevron’s investor day, the company reiterated holding annual capital spending through 2026 in the range of $15 billion to $17 billion, some 50% lower than peak levels. The only energy component of the Dow Jones Industrial Average also emphasized on cutting 2026 operating expenses per barrel in excess of 10% from the 2021 levels.
CVX’s lowered expenditure needs will increase its operating cash flow on a per-share basis by 10% every year till 2026 assuming $60 Brent. Investors should know that the international benchmark is now trading at an eight-year high of more than $110 per barrel. Considering this buffer, CEO Michael Wirth assured that the buybacks will continue even if oil prices dip.
Compared to previous instances of commodity price upturns, when CVX prioritized spending on mega-projects to augment output, shareholder returns are its primary focus now. Nevertheless, Chevron aims to grow production by around 13% from 2021 levels to more than 3.5 million barrels a day by 2026 – mostly from the Permian Basin and the Tengiz project in Kazakhstan.
Last but not the least, the company has accelerated efforts to lower carbon intensity and is progressing toward its 2030 goals. As part of that initiative, it recently acquired biodiesel producer, Renewable Energy Group for $3.15 billion in an all-cash deal. Chevron’s existing renewable fuel partnership with Bunge, together with Renewable Energy Group’s biodiesel production facilities, will transform the energy behemoth into one of the largest North American renewable fuels producers.
Considering these rafts of positive updates, if you want to capitalize on oil’s bull run, Chevron might be the stock to place your bets on. The company currently carries a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.