Uche Cecil Izuora
Oil major Chevron Corp. has boosted its planned share buyback to as much as $5 billion per year, as the firm 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 per cent 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 per cent 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 per cent 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 per cent of the total budget, will be spent on low carbon investments.