(New York) The board of directors of the American oil group Chevron on Wednesday authorized the launch of a share buyback program for a maximum amount of 75 billion dollars, one of the largest ever seen.
The envelope will be unlocked from 1er next April, according to a press release from the group. The program, which has no expiry date, replaces a previous version of a total amount of 25 billion dollars, started in January 2019 and which expires at the end of March.
Share buybacks allow a company to take control of some of its own securities.
It then usually cancels them, which reduces the number of existing shares and mechanically increases the value of the shares remaining in circulation, benefiting the shareholders.
This measure is regularly criticized, mainly because the money dedicated to these buyouts is not reinvested in the company and in the real economy.
Even before the launch of this new phase, Chevron was already one of the companies devoting the most cash to buying back its own shares.
The surge in oil prices since the start of the war in Ukraine has boosted the results of the sector, which has devoted a significant part of its profits to share buybacks and the payment of dividends.
Over the first three quarters of 2022 (full-year results won’t be released until Jan. 27), Chevron spent $7.55 billion acquiring its own stock. Adding the dividends, the amount reaches 15.5 billion dollars.
The program unveiled by the firm of San Ramon (California) is one of the most massive ever announced. The palm remains with Apple, whose board had approved a budget of 100 billion dollars in 2018.
Last April, the technological giant put on the table a new envelope of 90 billion dollars.
According to a calculation made by AFP, the group at the apple has spent some 554 billion dollars to buy its own shares since 2012, ten years. Only five American companies weigh more on the stock market.
Generally speaking, like oil companies, tech heavyweights often raise considerable funds for share buybacks.
In 2021, a good year for the sector, Google had disbursed $50.3 billion for this purpose, and Meta, $44.8 billion.
Chevron warned Wednesday that the new program “(does) not require the company to acquire any amount of its stock and (may) be suspended or terminated at any time.”