Oxy CEO Vicki Hollub doesn’t seem worried about White House pressure on buybacks, oil prices
Occidental (long known as Occidental Petroleum) was the No. 1-performing stock in S&P 500 last year, but it didn’t get there by way of massive growth in oil and gas production. While fossil fuels have the tailwind of the Russia-Ukraine war resetting energy policy and priorities around the globe, on Wall Street, it’s the recent capital discipline displayed by energy companies that has been as a big a factor in market performance.
The boom and bust cycles of the past when oil rig count exploded in line with the latest high price in crude oil are now seen as a cautionary tale. “We’ve seen that movie before,” Hess CEO John Hess said at the annual CERAWeek energy conference on Tuesday. That new fiscal approach from the energy patch has not made the White House happy, especially when oil prices and oil company profits were at a peak last year. The blowback from President Biden has continued, with recent buyback programs from companies including Chevron attracting renewed scrutiny. But when you listen to the way Chevron CEO Mike Wirth talked about its plans to increase the level of buybacks for shareholders, it seems the White House was an afterthought — if any thought was given to it.
Long-time energy sector analyst Paul Sankey put it this way after the recent Chevron earnings call: “I would be absolutely certain many in the White House own Chevron stock in their 401ks. In DC, it is clear that politicians have no comprehension of 1) what a buyback is and 2) how many Americans own stocks in their pension funds/401ks. The tone of Mike’s delivery, and he is a relaxed and confident guy, indicated that they were not really considering Washington, D.C.”
Wirth isn’t the only one sitting in the driver’s seat at a major oil and gas company who seems to have little time to worry about the way the White House views stock buybacks.
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Occidental’s approach has attracted the world’s most-famous investor, with the company quickly growing to be among the top 10 stocks held by Warren Buffett’s Berkshire Hathaway over the past several years (second to Chevron among Buffett’s public energy stock holdings). Buffett recently made clear (for the umpteenth time) what he thinks about politicians weighing in on buybacks.
With roughly 12% production growth, Occidental could produce more. And in fact, one point the White House has made is that oil companies are spending too much on “enriching” shareholders and not enough on producing more. But when asked by CNBC’s Brian Sullivan on Monday at CERAWeek if the company could produce more, Occidental CEO Vicki Hollub answered in a direct way that defies any concern about political pressure:
“We do,” Hollub said, have the ability to produce more oil, “but we have a value proposition that includes an active buyback program and also a growing dividend and we always want to make sure we max out our return on capital employed. So we are very careful with how we structure our capital program on an annual basis to make sure we still have sufficient cash to buy back shares.”
This year, Occidental authorized a new $3 billion share repurchase authorization and a 38% increase to its dividend. It completed $3 billion in share repurchases last year, with $562 million of repurchases in the fourth quarter.
Frederick Forthuber, president of Oxy Energy Services, said separately at CERAWeek that U.S. oil production will grow by about 500,000 barrels per day this year, with 80% or 90% of that coming from the Permian basin, according to Reuters. Hollub noted in her CNBC interview that current capacity as measured in total barrels produced per day — nearly 12 million bpd in 2022 and projected by the EIA to reach over 12 million bpd this year — has not changed significantly from the pre-pandemic world, though the EIA forecast would be a new record. Its outlook for gas prices is an average $3.57/gallon this year.
For consumers still worried about the price of gas at the pump, which has come down significantly along with crude prices from last summer’s high, don’t look to Hollub for more relief. Gas prices are right where they should be right now, she says, and are likely to stay this way.
“Prices are in a good place right now, in the $75-$80 range. That’s a sustainable price scenario for the industry to continue to be healthy and gas prices at the pump are not so bad at this price.”
In fact, she described the situation as “optimum.”
“I do believe the mid-cycle price of oil is close to $80, maybe $75 to $80,” Hollub said. “In that price regime we can balance supply with demand over time,” she added.
If there is risk to gas prices this year, it’s to the upside. “I do think towards the end of the year we will have a little supply issue relative to demand, and it could send prices higher,” she said.
And while the energy CEOs are showing through their words and actions this year that they aren’t buying the White House “Big Oil” rhetoric and will continue to message to the shareholders they’ve been able to win back, Hollub does expect one notable oil buyer to remain on the sidelines this year: the White House.
Amid high gas prices last year, the Biden administration released the most oil from the Strategic Petroleum Reserve on record, 180 million barrels. While the administration has said it will be replenishing the SPR, Hollub doesn’t expect much buying.
“I think we should have more storage in the SPR and over time the administration will buy that storage back and start to refill, but it’s gonna be hard to do any time in the next couple of years, because I do believe we are in a scenario where prices will be higher.”
Among the reasons oil prices will remain higher?
“Lack of supply and lack of investment in our industry over the years,” Hollub said. “I do think they are going to have a difficult time here in the near term.”
Based on the way the oil CEOs are talking, maybe in more ways than one.
Credit where credit is due: in a massive, 32-car multinational independent test, Tesla’s Autopilot ADAS came out on top, the new affordable Tesla turns out to be a corner-cutting Model Y, and one of the company’s original founders compares the Cybertruck to a dumpster. All this and more on today’s episode of Quick Charge!
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Tesla is again teasing the new Roadster, which is now five years late, as “the last driver’s car” before self-driving takes over.
The chicken or the egg. Is Tesla delaying the Roadster to match the development of self-driving technology, or is it delaying the development of self-driving technology to match the delayed release of the Roadster?
The prototype for the next-generation Tesla Roadster was first unveiled in 2017, and it was initially scheduled to enter production in 2020; however, it has been delayed every year since then.
It was supposed to achieve a range of 620 miles (1,000 km) and accelerate from 0 to 60 mph in 1.9 seconds.
It has become a sort of running joke, and there are doubts that it will ever come to market despite Tesla’s promise of dozens of free new Roadsters to Tesla owners who participated in its referral program years ago.
Tesla used the promise of free Roadsters to help generate billions of dollars worth of sales, which Tesla owners delivered; however, the automaker never delivered on its part of the agreement.
Furthermore, many people placed deposits ranging from $50,000 to $250,000 to reserve the vehicle, which was initially scheduled to hit the market five years ago.
When unveiling the vehicle, CEO Elon Musk described it as a “halo car” that would deliver a “smack down” to gasoline vehicles.
That was almost eight years ago, and many electric hypercars have since launched and delivered this smackdown.
Tesla has partly blamed the delays on improving the next-gen Roadsters and added features like the “SpaceX package,” which is supposed to include cold air thrusters to enable the vehicle to fly – Musk has hinted.
Many people don’t believe any of it, as Tesla has said that it would launch the new Roadster every year for the last 5 years and never did.
Now, Lars Moravy, Tesla’s head of vehicle engineering, made a rare new comment about the next-generation Roadster during an interview at the X Takeover event, an annual gathering of Elon Musk cultists, last weekend.
He referred to Tesla’s next-gen Roadster as the “last best driver’s car” and said that the automaker did “some cool demos” for Musk last week:
We spent a lot of time in the last few years rethinking what we did, and why we did it, and what would make an awesome and exciting last best driver’s car. We’ve been making it better and better, and it is even a little bit more than a car. We showed Elon some cool demos last week and tech we’ve been working on, and he got a little excited.
The timing matches Musk’s recent claim that Tesla is going to have ‘the most epic demo ever, ’ but we heard that one before.
We suspected that the comment might be about the Tesla Roadster, as the CEO made the exact same comment about Roadster demos in 2019 and 2024. You will not be shocked to hear that these demos never happen.
Electrek’s Take
The “last best driver’s car” before computers are going to drive us everywhere. It’s a self-fulfilling prophecy if you continue to delay the car. It might literally be the last car ever made that way. How would we ever know?
The truth is that the Roadster was cool when it was unveiled in 2017, but that was a long time ago. Tesla would need to update the car quite a bit to make it cool in 2025, and I don’t know that cold air clusters are it. You will have extreme limitations using those.
The Roadster is almost entirely in the “put up or shut up” category for me at Tesla. They need to stop talking about it and make it happen; otherwise, I can’t believe a word.
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The PV5 is already available in several markets, but will Kia launch it in the US? After Kia’s electric van was spotted testing in the US again, a US debut could be in the works.
Is Kia’s electric van coming to the US?
Kia launched the PV5, the first dedicated electric van from its new Platform Beyond vehicle (PBV) business, in South Korea and Europe earlier this year, promising it will roll out in “other global markets” in 2026.
Will that include the US? Earlier this year, Kia’s electric van was caught charging at a station in Indiana. Photos and a video sent to Electrek by Alex Nguyen confirmed it was, in fact, the PV5.
Kia has yet to say if it will sell the PV5 in the US, likely due to the Trump Administration’s new auto tariffs. All electric vans, or PBVs, including the PV5, will be built at Kia’s Hwaseong plant in South Korea, which means they will face a stiff 25% tariff as imports.
Following another sighting, a US debut cannot be ruled out. The PV5 Passenger model was spotted by Automotive Validation Engineer Chris Higa (@Chrisediting) while testing in Arizona.
There’s no denying that’s Kia’s electric van, but it doesn’t necessarily confirm it will launch in the US. But it could make sense.
Despite record first-half sales in the US, Kia’s EV sales have fallen significantly. Sales of the EV9 and EV6 are nearly 50% less than in the first half of 2024.
To be fair, part of it is due to the new model year changeover, but Kia is also doubling down on the US market by boosting local production. Earlier this year, Kia said the EV6 and EV9 are now in full-scale production at its West Point, GA, facility.
The PV5 Passenger (shown above) is available in Europe with two battery pack options: 51.5 kWh or 71.2 kWh, rated with WLTP ranges of 179 miles and 249 miles, respectively. The Cargo variant has the same battery options but offers a WLTP range of either 181 miles or 247 miles.
During its PV5 Tech Day event last week, Kia revealed plans for seven PV5 body types, including an Open Bed (similar to a pickup), a Light Camper, and even a luxury “Prime” passenger model.
Kia is set to begin deliveries of the PV5 Passenger and Cargo Long variants in South Korea next month, followed by Europe and other global markets, starting in Q4 2025. As for a US launch, we will have to wait for the official word from Kia.
Do you want Kia to bring its electric van to the US? Drop us a comment below and let us know your thoughts.
Source: Chris Higa, TheKoreanCarBlog
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