Chevron stock slides amid news of $75 billion repurchase program, Q4 earnings miss

Yahoo Finance Live examines Chevron shares following a disappointing earnings report and the energy company's stock buyback program.

Video transcript

SEANA SMITH: Oil and gas giant Chevron posted a record $36 and 1/2 billion profit for 2022. That's more than double the company's profits from 2021. But fourth quarter results showing a miss on that bottom line, putting some pressure on the stock today. You can see it off just about 4%.

But Jared, this coming after Chevron earlier this week announced that massive $75 billion share buyback. I think some people are scratching their heads. We know the White House clearly criticizing Chevron's decision to do so, saying that they need to allocate more money in terms of production and lowering the oil price here in the US. But I think it's interesting timing of all of this.

JARED BLIKRE: Yeah, so the White House is going to-- the White House is going to talk through a book. And Chevron is going to do what they've been doing for quite a long time. I want to go to the YFi Interactive, just to highlight, go down memory lane here. This is a 20-year chart of Chevron. And the reason that buybacks and dividends are so important to Chevron and every other US energy company, not so much the European ones, is because we expect them to return shareholder capital.

Now, in the leadup, let's say in the leadup to the great fracking era, the peak, the pinnacle there, and the crash, crude oil was actually $150 a barrel in 2007. It was $100 a barrel here. Both times, it crashed. And this shell shocked the industry. Then we had the pandemic. WTI went to negative $40. That's still a head scratcher for me.

So after all this time, yeah, they had a banner year last year. But they're making up lost ground. And the business model is such that they are expected to return that cash to shareholders, either through buybacks or dividends. So, to change that debate, you're going to have to do a lot of other changing structurally here.

DAVE BRIGGS: Many think we're headed back towards 100 bucks a barrel and circling back to that White House criticism. We continue to call on oil companies to use their record profits to increase supply and reduce costs for the American people. Chevron would argue we have increased production. It's at or near an all-time high domestically. It, of course, fell off a cliff during the pandemic because, of course, the price of oil did. But it is back up right near highs pre-pandemic, Seana. And I think you have to draw a different line.

And I don't want to get involved in the political fray here between what Chevron is doing and what the US airlines did between 2014 and 2020, which is use buybacks far more than they paid their clients or paid their employees or gave them benefits. And then what happened? The pandemic hit, and they came begging for money from the government, $54 billion, most of which did not have to be paid back. That, I have a problem with. That, the White House ought to have a problem with.

SEANA SMITH: Yeah, two, yeah, very, very different issues. But yes.

DAVE BRIGGS: EVs are replacing gas cars in New York and California by 2030. What are you supposed to do if you're Chevron?

SEANA SMITH: Yeah, what are you supposed to do? And Chevron really didn't hesitate to respond to the White House. They're saying they're doing it all. They're returning money to shareholders. They're also investing, they're also looking to grow traditional and new energy. So they're saying that they have all grounds covered. It's also going to be a huge topic when we look ahead to next week or the next couple of weeks.

We have Exxon next week. We have a number of the other larger oil companies reporting over the next several weeks. Big questions about some of the gains that we'll likely get from some of those larger oil companies, looking back at Q4. But of course, then, what that means for the industry going forward and maybe what growth we are expected to see for the rest of 2023.

DAVE BRIGGS: Still see record profits over the last 12 months.