Michael Wirth, CEO, Chevron, speaking at the World Economic Forum in Davos, Switzerland, January 23, 2020.
Adam Galica | CNBC
Chevron CEO Michael Wirth told CNBC he had not spoken to Berkshire Hathaway since the company took part in the oil giant, but said the decision suggested confidence in Chevron’s long-term future.
“I can’t deduce anything other than their investment decision would suggest that there is some confidence in our company’s long-term future and our ability to generate value for long-term shareholders,” Wirth told Closing Bell at CNBC.
“I look forward to meeting them in the coming weeks and months,” he added.
Berkshire began building a position in Chevron in the fourth quarter of 2020 and, by the end of last year, had accumulated more than 48 million shares in the oil giant, according to documents submitted to the Securities and Exchange Commission.
Berkshire’s annual letter to shareholders said that, as of the fourth quarter, Chevron’s position was worth $ 4 billion north, making it one of the company’s top ten holdings.
“I think Chevron is a great long-term investment for any investor, so we certainly welcome Berkshire Hathaway’s investment in our company. They are well known as long-term investors and value-oriented investors and one that we are very excited to have in our stock, ”said Wirth.
His comments followed Chevron’s annual investor day, during which the company promised higher returns and lower carbon emissions in the future. The company’s shares reached their highest level in a year on Tuesday, before closing the session down 0.23%.
For the year, the stock has increased by almost 30% amid a turnover in the beaten energy sector, although the stock is about 19% below its all-time high in 2014.
After a brutal year for the energy sector, as oil prices fell to unprecedented lows, Chevron implemented aggressive cost-cutting measures and significantly reduced its capital spending plan. During the investors, the company presented an optimistic vision to double the return on capital employed by 2025 and increase the free cash flow by more than 10% annually until that year.
“It simply came to our notice then. Demand is returning as the pandemic gradually becomes better controlled and supply has been somewhat constrained by OPEC and OPEC +, so excess stocks are falling and prices are reflecting this gradual move back to a more balanced state, “Wirth told CNBC.