Chevron buys back shares for $75 billion after record profit

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(Bloomberg) — Chevron Corp. plans to buy back $75 billion worth of stock and increase dividend payments after a year of record profits that led to angry condemnations from politicians around the world as rising energy prices put pressure on consumers.

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

While Chevron’s plan pales in comparison to the $89 billion Apple Inc. spent the past year on buybacks, it is likely to enrage critics who have accused the oil industry of making war profits after Russia’s invasion of Ukraine sent energy prices soaring.

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President Joe Biden was among those who criticized oil explorers for spending money on shareholder-friendly initiatives like dividends and buybacks instead of plowing it into more drilling that would boost crude oil inventories. Chevron rose as much as 3.9% in after-hours trading.

“For a company that claimed not so long ago that it was ‘working hard’ to increase oil production, handing out $75 billion to executives and wealthy shareholders is certainly a strange way to show it,” said Abdullah Hasan, a spokesman for the White House. in a statement on Wednesday evening. “We continue to call on oil companies to use their record profits to increase supply and reduce costs for the American people.”

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

While energy prices have fallen since the early stages of Russia’s attack on Ukraine, analysts expect US oil company earnings to remain strong as they have kept capital spending in check, unlike previous boom cycles. Instead, the windfall has been used to repay debt and increase returns for investors.

Chevron increased its share buybacks several times last year as oil prices rose, but Chief Financial Officer Pierre Breber has pledged to maintain the buyback rate even as commodity prices fall. With net debt ratios currently below the company’s target range, Chevron is willing to raise borrowing levels to buy back shares if necessary, Breber said last year.

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The company announced last year that capital expenditures for 2023 will be at the high end of its target range at $17 billion. Chevron is expected to report fourth quarter results on January 27.

–With assistance from Tom Contiliano and Justin Sink.

(Updates with White House response, in paragraph 5.)

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