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Chevron to buy back $75 billion in stock after record profits

(Bloomberg) — Chevron Corp. plans to buy back $75 billion worth of stock and increase its dividend payout after a year of record profits that drew angry accusations from politicians around the world as rising energy prices squeezed consumers.

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The share buyback program will begin on April 1 and will be three times larger than the previous authorization announced in early 2019, the company said on Wednesday. The program is equivalent to almost a quarter of the company’s market value and five times the current annual buyback level.

Although Chevron’s plan pales in comparison to the $89 billion that Apple Inc. set aside for buybacks in the past year, is likely to anger critics who have accused the oil industry of war profiteering after Russia’s invasion of Ukraine sent energy prices soaring.

President Joe Biden was among those who criticized oil explorers for devoting money to shareholder-friendly initiatives such as dividends and buybacks instead of investing in more drilling that would boost crude supplies. Chevron rose as much as 3.9% in after-hours trading.

“For a company that not long ago said it was ‘working hard’ to increase oil production, giving $75 billion to executives and wealthy shareholders is certainly a strange way to show it,” said Abdullah Hassan, a White House spokesman. in a statement Wednesday evening. “We continue to call on the oil companies to use their record profits to increase supply and lower costs for the American people.”

The company will also pay investors a dividend of $1.51 per share on March 10, a 6.3% increase from the previous quarter.

Although energy prices have retreated since the early stages of Russia’s attack on Ukraine, analysts expect US oil company profits to remain strong as they have kept capital spending under control, unlike in previous boom cycles. Instead, the windfall was used to repay debt and increase investor returns.

Chevron increased share buybacks several times last year as oil prices rose, but Chief Financial Officer Pierre Breber has vowed to maintain the buyback rate even as commodity prices retreat. With a net debt ratio currently below the company’s target range, Chevron is willing to let debt levels rise to continue buying back shares if necessary, Breber said last year.

The company announced last year that capital spending for 2023 would top its $17 billion range. Chevron is scheduled to report fourth-quarter results on Jan. 27.

–With assistance from Tom Contilian and Justin Sink.

(Updates with reaction from the White House, in the fifth paragraph.)

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