A $17.5 Billion Increase In Chevron's Share Buyback Rate‍

Despite the fact that crude prices have fallen by more than 30% since June, Chevron Corp. boosted the rate at which it buys back shares on an annual basis as a sign of confidence in its cash-generation targets.

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Chevron, based in San Ramon, California, announced in a statement on Tuesday that it will start repurchasing shares at a rate of $17.5 billion yearly in the second quarter, up from the previously anticipated $15 billion. The upper end of Chevron's buyback target was increased by a third to $20 billion annually, allowing it room to go even higher in the future.

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In spite of today's significantly lower crude prices, Chief Executive Officer Mike Wirth is anxious to demonstrate that the cash returns guaranteed to shareholders last year when oil prices rose to over $100 a barrel are tenable. Prior to today, analysts questioned whether the second-largest US oil company's current portfolio would continue to generate the revenue required for shareholder dividends.

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Chevron attempted to allay these worries by promising a 3% yearly increase in production, with an additional almost 900,000 barrels a day coming from the Permian Basin, Kazakhstan, the Gulf of Mexico, and other places by 2027. Half of the anticipated rise would come from the Permian, while TCO, its largest Kazakh asset, will also contribute significantly new output once its Future Growth Project is operational.

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According to Chevron, this growth will occur despite a flat capital expenditure due to an increase in yearly free cash flow of more than 10% at Brent prices of $60 per barrel. In New York's premarket trading, the stock increased 1.3%, keeping pace with Brent's gain.

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During Russia's invasion of Ukraine, US Vice President Joe Biden has regularly lambasted Chevron and its competitors for what he claims is excessive expenditure on buybacks. Instead, in order to increase supply and lower prices, the administration has urged for increased investment in oil production.

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But, Wirth and the US oil industry have resisted, claiming that output is rising and that after a decade of subpar stock market results, stockholders are entitled to bigger dividends.

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The S&P 500 Energy Index has declined 3.7% this year, compared to a 9.3% loss in Chevron's stock. Recently, the business revised its growth projections for the Permian Basin, in part because oil well performance was less than anticipated. The largest US shale basin is still expected to form the foundation of Chevron's medium-term growth. By 2027, production will increase by more than 35%, reaching around 1.2 million barrels per day of oil equivalent.