Chevron, the U.S. oil major announced this Friday that it had the highest profit in six quarters, and that it will be joining a raising trend of buyback shares; in a strategy to re win investors and reward them after a period of crisis due to the pandemic.
Firstly, as we have reported previously, oil prices surged around 57% when compared to last year; gas prices also peaked due to weather demand. On top of this, OPEC took the decision to carry on with production curbs into next year, but with monthly and slight increases. Such measures have kept oil prices above $70 per barrel.
Secondly, Chevron also reported that it has cut its capital spending forecast at about $13 billion; bellow to the original budget of $14 to $16 billion; such measure enabled the company to pare debt and resume share repurchases, officials said.
Thirdly, buybacks will resume for the current quarter of the year at a rate of $2 billion, the company reported; such amount is about half of the annual rate that previously planned. Earlier this year the company halted purchases of its own shares as the pandemic cut oil demand. However, Chevron will now join Shell, TotalEnergies and Equinor in the trend of buying back shares.
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Chevron with a $3,18 billion profit
Moreover, Chief Financial Officer of Chevron, Pierre Breber told Reuters. “We’ve always said we would begin buybacks when we were confident that we could sustain it; and our breakeven is $50 per barrel and we are now well above it. We’re trying to win back investors; demand for our products has fully recovered, demand for our stock is also recovering.”
In addition, upon the release of the news, Chevron’s shares were up 1,4% at $104 in premarket date. About its earnings for the 2Q of 2021, the company reported a $3,18 billion for its oil and gas business; substantial increase when compared to a loss of $6,09 billion a year ago.
Furthermore, the company’s total oil and gas production rose 5% over a year ago to 3.13 million barrels of oil equivalent per day (boepd); while sales per barrel averaged $54 las quarter; compared to $19 from a year earlier.
Finally, the company expects that its output from the Permian basin to be almost same as last year’s; but also said it will add drilling rigs in the second half. Its production rate from the top U.S. shale basin is expected to be 600,000 boepd by the end of 2021.
