Chevron reported its highest profit in six quarters and joined an oil industry stampede to reward investors with share buybacks, as rebounding crude oil prices carried earnings and cash flow to pre-pandemic levels
The company has lowered its annual capital investment forecast. It was about $ 13 billion, now below last year’s spending. Previously, it budgeted $ 14 to $ 16 billion annually for annual capital expenditures by 2025.
Last year, Chevron cut costs to generate profits in excess of $ 50 a barrel. Lower costs and higher prices have generated the highest cash flow in two years, allowing the company to cut debt and resume share buybacks, officials said. Michael Wirth, CEO, said share buybacks will resume this quarter at an annual rate of $ 2 to $ 3 billion, about half of the planned annual rate.
The company and its rivals stopped buying early last year as the pandemic reduced oil demand. Chevron is now joining the Royal Dutch Shell, TotalEnergies, and Equinor to resume repurchases.
“We’ve always told Reuters that we’ll start buying back when we’re confident we can keep it, with a break-even point of $ 50 per barrel,” Chief Financial Officer Pierre Braver told Reuters. It’s much more than that now. “
“We are trying to regain investors … demand for our products has fully recovered and demand for our stocks has recovered.”
The company’s stock was $ 104, up 1.4% in pre-market trading.
Oil and gas production, the second largest producer in the United States in the quarter ending June 30, generated $ 3.18 billion in revenue, compared to a loss of $ 6.09 billion a year ago. rice field.
Total oil and gas production increased 5% a year ago, with a daily barrel of oil equivalent of 3.13 million barrels (boepd), but Chevron sold US oil for $ 54 a barrel in the previous quarter. ($ 19 for the same period last year).
Chevron expects output from the Permian basin to be about the same as last year, but said it would add drilling rigs in the second half of the year. Production from the US Top Shale Basin is expected to reach 600,000 boepd by the end of 2021.
Anish Kapadia, Energy Director of London-based Palissy Advisors, said Chevron’s Permian addition “seems to be still being measured … it seems to be focused on generating free cash flow.” ..
Meanwhile, US top oil producer ExxonMobil said it expects spending on major projects such as Guyana and the Permian to increase in the second half of this year due to strong quarterly profits.
Crude oil prices rose 57% from this year to June, but the hit refining and chemicals improved due to improved plant utilization and margins.
The United States accounted for most of the $ 839 million profit in Chevron’s refining business this quarter, as Asian units suffered from weak margins.