Chevron Eyes Boost to Share Buybacks on Energy Rally, CFO Says
(Bloomberg) -- Chevron Corp. is exploring an increase in share buybacks as soaring oil and natural prices generate record cash flow.
The oil giant’s third-quarter earnings were so strong that the net-debt-to-capital ratio fell below Chevron’s target of 20% to 25%, a key threshold that could spur an increase in stock repurchases, Chief Financial Officer Pierre Breber said during an interview.
Under Chevron’s existing buyback program, the company aims to spend $2 billion to $3 billion a year on repurchases.
“We’re fast approaching a net-debt ratio where we could increase our buyback guidance range even further,” Breber said.
The big question for oil executives is whether they’ll devote the windfall from surging commodity markets to drill more wells or enrich shareholders. As for Chevron, it’s leaning toward the latter approach.
The oil explorer plans to increase capital spending next year but still remain below its already-stated $17 billion cap, which is roughly 20% below pre-pandemic levels.
Over time, excess cash “will be returned to shareholders in a sustained and growing dividend and a ratable buyback that we maintain through the cycle,” Breber said.
Chevron bought back $625 million in shares during the third quarter and will ramp that up to $750 million in the current period, Breber said.
“The outlook is positive, strong demand across our products with more recovery expected,” he said. “We tend to have the most leverage to oil prices. We’ll see that come through” during the final three months of this year.
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