Chevron posts record profit, bolstering US$75b buyback plan

Chevron pushed full-year profit to a record on the back of surging commodity prices and domestic oil production, generating unprecedented cash flow that will underpin a mammoth US$75 billion share-buyback programme.

Adjusted 2022 earnings more than doubled to US$36.5 billion from a year earlier, while oil and natural gas output from the company’s US fields climbed almost 4 per cent to the equivalent of 1.181 million barrels a day, Chevron said in a statement on Friday (Jan 27).

The blockbuster profit report is likely to irk oil-industry critics in the White House and Congress, already incensed by the second-largest US oil explorer’s announcement just days ago of plans to repurchase US$75 billion of its own stock. The amount devoted to buybacks would be enough to buy Occidental Petroleum or almost any other domestic competitor.  

Although Chevron’s full-year results surpassed Wall Street expectations by most standard performance metrics, fourth-quarter adjusted earnings of US$4.09 a share fell 18 cents shy of the Bloomberg Consensus estimate. The explorer also disclosed a US$1.1 billion writedown on international assets, without providing additional details.

Analysts and investors will be listening closely for more information on the writedown when chief executive officer Mike Wirth and chief financial officer Pierre Breber host a conference call later. 

Chevron shares rose the most in almost four months on Thursday in response to the surprise buyback announcement after the close of equity trading a day earlier. While investors cheered, the Biden administration panned the shareholder-friendly initiative, arguing the cash would be better spent increasing energy supplies to bring down pump prices. 

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“For a company that claimed not too long ago that it was ‘working hard’ to increase oil production, handing out US$75 billion to executives and wealthy shareholders sure is an odd way to show it,” the White House said in a statement within hours of the company’s announcement.

Chevron returned more than US$22 billion to investors last year in the form of buybacks and dividends.

Oil companies should “use their record profits to increase supply and reduce costs” for consumers, the White House statement said. 

Chevron is the first of the five supermajors to report earnings, with Exxon Mobil scheduled to post results on Jan 31, followed by Shell, BP and TotalEnergies in the coming weeks. BLOOMBERG