By Sabrina Valle
HOUSTON (Reuters) -Oil major Chevron Corp (NYSE:CVX) on Tuesday expanded its share buyback program and laid out plans to add 750,000 barrels of oil and gas per day to its U.S. production on gains from the country's shale basins and the Gulf of Mexico.
U.S. oil companies have been moving more of their investments to the Americas to reduce costs and pare geopolitical risks, amid pressure from the White House for more in-country production.
Chevron told investors at an annual presentation that it plans to raise global output at a 3% annual rate through 2027. The No. 2 U.S. oil producer delivered 3 million barrels of oil and gas per day last year.
Chevron's shares closed down 1.3% to $160.77.
"We plan to grow both traditional and new energy supplies while safely delivering higher returns and lower carbon," Chief Executive Michael Wirth said.
Much of the increase will come from the top U.S. shale field, where Chevron expects daily output to reach 1 million barrels in 2025. Last quarter it pumped 738,000 barrels per day from the Permian basin, despite inflation costs and uncompleted wells.
"Time will tell as to whether Chevron has convinced the market on moving past its Permian challenges," Biraj Borkhataria, RBC (TSX:RY)'s director of European research, said in a note to clients.
Chevron has added more than 40,000 barrels per day in Venezuela this year, but additional gains could be limited by political risks, Wirth said. In Kazakhstan, which accounts for 14% of its reserves, Chevron will increase output by 130,000 barrels per day by 2027 from an expansion project whose investments are now winding down.
MORE SHARE BUYBACKS
The company said this year's spending on new oil and gas projects will be near the top end of its previously announced $15 billion to $17 billion guidance, with a greater share in the United States.
While spending is growing, distributions to shareholders are greater. Chevron last year invested $15.7 billion in operations and returned $26 billion via dividends and buybacks.
Wirth said Chevron will expand the share buyback rate by 17% to $17.5 billion a year starting next quarter. Just a month ago, Chevron had tripled the budget for the buyback program to $75 billion, with no fixed expiration date.
It also doubled the annual range to between $10 billion and $20 billion by 2025, assuming Brent oil prices between $50-$70 per barrel. Brent settled at $83.45 a barrel on Tuesday.
"We have just become much more efficient, we can get more done for every dollar that we spend," Wirth said.
The top Western oil companies benefiting from high energy prices posted a record $219 billion in profits last year, spurring some European Union countries and the United Kingdom to impose windfall taxes on the industry to help consumers with energy costs.
The amount of cash available for companies has raised the prospect of a wave of oil mergers and acquisitions. Wirth did not rule out a consolidation among oil majors, but stressed that regulatory approval would make big deals difficult.
"I never say never to anything," he said.
Chevron is not in a hurry for M&A in oil or renewable energy and remains committed to keeping a tight rein on spending, he said.