Michael Wirth, CEO of Chevron, speaking at the World Economic Forum in Davos, Switzerland, January 23, 2020.
Adam Galica | CNBC
Chevron CEO Michael Wirth told CNBC that he has not spoken to Berkshire Hathaway since the company acquired a stake in the oil giant, but said the decision suggests confidence in Chevron’s long-term future.
“I cannot infer that anything other than your investment decision could suggest that there is some confidence in our company’s long-term future and our ability to generate shareholder value in the long term,” said Wirth in CNBC’s Closing Bell.
“I look forward to meeting you in the coming weeks and months,” he added.
Berkshire began building a position in Chevron during 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 records from the Securities and Exchange Commission.
Berkshire’s annual letter to shareholders stated that, in the fourth quarter, Chevron’s position was worth more than $ 4 billion, making it one of the company’s top ten stakes.
“I believe Chevron is a great long-term value investment for any investor and therefore we certainly welcome Berkshire Hathaway’s investment in our company. They are well known as a long-term investor and a value-oriented investor, that we are very pleased to have in our inventory, “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 stock reached its highest level in a year on Tuesday, before closing the session with a fall of 0.23%.
For the year, the stock rose almost 30% amid a rotation for the energy sector, although the stock is about 19% below its highest record in 2014.
After a brutal year for the energy sector in general, with oil prices falling to unprecedented levels, Chevron has implemented aggressive cost-cutting measures and significantly reduced its capital spending plan. During the investor’s day, the company presented an optimistic view to more than double the return on capital employed by 2025 and increase free cash flow by more than 10% per year until that year.
“We see markets recovering. Demand is returning as the pandemic is gradually becoming more controlled and supply has been somewhat restricted by OPEC and OPEC +, so excess stocks are falling and prices reflect this gradual movement of back to a state of equilibrium in markets, “Wirth told CNBC.