Chevron Analyst Day: Little News Apart From Repurchase Increase; Management Emphasizes Discipline

Apart from an increase in its repurchase guidance, there was little news from Chevron’s annual analyst day on Feb 28. It now expects to repurchase $10 billion-$20 billion in shares annually, at oil prices ranging from $50/bbl-$70/bbl, compared with a previous maximum of $15 billion, which was a midyear 2022 increase from $10 billion at last year’s update. Although oil prices are above $70/barrel currently, it is only increasing its current second-quarter repurchase amount to an annual rate of $17.5 billion. Meanwhile, it extended to 2027 from 2026 and slightly increased its long-term target for a return on capital employed to more than 12% from 12% last year and rebased its cash flow targets to a more than 10% total free cash flow growth target from a more than 10% operating cash flow per-share amount last year. Also of note, both targets still assume $60/bbl for oil, but Henry Hub and international gas prices increased, meaningfully. Importantly, capital-expenditure guidance of $13 billion-$15 billion per year plus $2 billion in affiliate spending, as well as the Permian production target of 1 million barrels of oil equivalent per day, remains unchanged.