Chevron buys back $75 billion in shares after making record profits

(Bloomberg) — Chevron Corp. plans to buy back $75 billion in stock and raise its dividend after a year of record profits that drew angry denunciations from politicians around the world as rising energy prices put pressure on consumers.

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The company said in a statement on Wednesday that the share buyback program will begin on April 1 and will be three times the size of the previous authorization disclosed in early 2019. The program is equivalent to nearly a quarter of the company’s market capitalization and five times the current level of annual buybacks.

Although Chevron’s plan pales in comparison to the $89 billion Apple earmarked for buybacks last year, it is likely to anger critics who accused the oil industry of war profiteering after Russia’s invasion of Ukraine sent energy prices soaring.

President Joe Biden has been among those who have criticized oil explorers for allocating money to shareholder-friendly initiatives such as dividends and buybacks rather than for more exploration that would swell crude supplies. Chevron stock rose 3.9% in after-hours trading.

“For a company that claimed not long ago that it was ‘working hard’ to increase oil production, it certainly is an odd way of showing that to hand out $75 billion to wealthy CEOs and shareholders,” said Abdullah Hassan, a White House spokesman. In a statement Wednesday evening. “We continue to call on oil companies to use their record profits to increase supply and reduce costs for the American people.”

The company will also pay investors $1.51 per share on March 10, up 6.3% from the previous quarter.

Despite the decline in energy prices since the early stages of Russia’s attack on Ukraine, analysts expect US oil companies’ earnings to remain strong because they have kept capital spending in check, unlike previous boom cycles. Instead, the windfall was used to pay down debt and increase returns for investors.

Chevron raised share buybacks several times last year as oil prices soared, but Chief Financial Officer Pierre Breber vowed to maintain the buyback rate even as commodity prices fell. With net debt rates currently below the company’s target range, Breber said last year, Chevron is willing to allow borrowing levels to rise to continue buying stock if necessary.

The company announced last year that capital spending for 2023 would be at the high end of the guidance range at $17 billion. Chevron is scheduled to report fourth-quarter results on January 27.

— With assistance from Tom Contiliano and Justin Sinek.

(Updates on White House reaction, in fifth paragraph.)

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