Chevron resumes buybacks

Chevron said on July 30 that it would resume share buybacks after putting the programme on hold over a year ago following the onset of the coronavirus pandemic. The US major made the announcement while reporting a return to positive earnings in the second quarter.

Chevron will start buying back shares in the current quarter, aiming to repurchase stock worth $2-3bn each year, or around half as much as it was spending on the programme before the COVID-19 crisis. Earlier this week Chevron's European peers Shell and TotalEnergies likewise revived their buyback programmes, signalling growing confidence in the market outlook.

Chevron generated $3.08bn in earnings in the three months ending June 30, versus a steep loss of $8.27bn a year earlier. This reversal was driven by a surge in upstream earnings to $3.18bn from a loss of $6.09bn a year before, as a result of higher oil and gas prices.

Production also rose 145,000 barrels of oil equivalent/day year on year, arriving at 1.14mn boe/d, thanks to Chevron's takeover of Houston-based Noble Energy last year and reduced curtailment, offset by a 68,000 boe/d drop in output at the company's US Appalachian fields as a result of natural decline.

Downstream earnings came in at $839mn, versus a loss of $1.01bn a year earlier, as margins improved on refined products and sales increased. 

"Second quarter earnings were strong, reflecting improved market conditions, combined with transformation benefits and merger synergies," Chevron CEO Mike Wirth commented. "Our free cash flow was the highest in two years due to solid operational and financial performance and lower capital spending."

Cash flow from operations in the first half of the year reached $11.2bn, compared with $4.8bn a year earlier. Despite boosting rewards for shareholders, Chevron has kept a lid on spending, with year-to-date capital expenditure down 32% from the same period in 2020 at $5.3bn.