Despite Lower Oil Prices, Chevron’s Strategy Continues to Pay Dividends for Investors

Oil price instability will always affect Shehtir‘S (CVX 1.61%, financial result. This was clear in the first quarter as its earnings fell compared to the period of year. Meanwhile, the fall in raw prices in the current quarter has slowed down the pace of its shares to the oil company.

However, despite all this, Chevron The strategy is paying. The oil legendary company is producing a lot of cash, of which the wholesale is returning to shareholders through dividends and buybacks. With its cash flow on the track to grow in the next year, it is in an excellent position to continue the growing shareholder value.

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Drilling in the latest quarter

Chevron reported $ 3.8 billion of adjusted income during the first quarter, or $ 2.18 per share. While it was below the year-old level ($ 5.4 billion or $ 2.93 per share), it was more than analysts’ expectations ($ 2.16 per share). In the earnings press release, CEO Mike Varth said, “This quarter reflected strong execution and progress on our objective to give better shareholder price.”

The company struggled with several headwinds in the quarter, including low oil prices, weak sophisticated product margin and adverse and foreign exchange effects. Its production was almost flat in this period as it compensates for development from the sales of property (including selling its Canadian assets), the TCO (Kazakhstan), the Permian Basin and the Gulf of Mexico (also known as the US Gulf in the US).

Chevron’s TCO output increased by 20% as it completed the future growth projectDuring this time, Production in Permian increased by 12% due to investment and efficiency gains and other recently completed projects increased by 7% in the Gulf.

Chevron produced $ 7.6 billion cash flow from operation during the period and $ 3.7 billion free cash flow (except working capital adjustment). The company used its additional free cash and strong balance sheet to return $ 6.9 billion to shareholders during this period. It paid $ 3 billion in dividends and recited $ 3.9 billion in shares.

Chevron also spent $ 2.2 billion to buy about 5% Hayes, (Slutter 1.92%, Outstanding shareIt is inspired by this belief that this year will stop that needle-moving acquisition. The company finished the duration with 14.4% net leverage ratioWhich is still below its 20% to 25% target limit.

Alert about what is ahead is yet optimistic

In the earning press release, CEO Mike Varth commented, “Despite the changes in the market conditions, our flexible portfolio, strong balance sheet, and capital and cost discipline status to continuously focus on the situation of capital and cost discipline to provide us with industry-agronic free cash flow increase by 2026,” Chevron is on track to give additional free cash flow to $ 9 billion to $ 10 billion from $ 9 billion to $ 9 billion by next year, ” $ 60 to $ 70 per barrel range (the global benchmark was recently in the $ 60s). Growth drivers include TCO, The Gulf, The Permian and other catalysts such as its structural cost savings scheme.

It keeps a strong free-cash-flow growth Chevron in an excellent position to continue a lot of cash back to the shareholders. However, this year due to the weakness in crude oil prices (Brent has slowed down the global economy, due to concerns of about $ 20 per barrel from its peak), Chevron believes that it is prudent to slow down its share renovation speed for time. The company is expected to buy stocks of $ 2.5 billion to $ 3 billion to $ 3 billion during the second quarter, below $ 3.9 billion in the previous quarter. It is still on track to renovate shares above the low end of the $ 10 billion to $ 10 billion annual target limits.

Chevron’s plan is not a factor in stopping the acquisition of $ 53 billion of Hayes, which he signed in late 2023. The company is currently Engaged with Exxonmobil Hayes’ share in the world -class Guyana property of the oil giant company. Oil companies have agreed to mediationWith the date of the court set for 26 May.

The Chevron is so confident that it will win that it imposed capital on the decline in Hayes’s stock to buy about 5% of its outstanding shares in the open market. If the Chevron wins, it will immediately shut down the deal, which will significantly increase and increase its ability to increase its production and free cash flow in the coming years.

A high quality oil stock

The strategy of investing in Chevron’s projects that will increase its cash flow is paying. Its free cash flow is on track to grow next year, Is giving Even more cash to return to shareholders via its attractive dividend (5% recent yield) and share bibbacks. While the company is taking a cautious approach to buyback in the near period, it can increase its speed as its speed increases. Finally add the opposite capacity to the possibility of shutting down your HES deal, and the Chevron remains an attractive option for income -seeking investors and excluded the total return capacity.