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.
Aeromine Technologies just closed a $9 million funding round, and it’s ready to scale up production of its bladeless rooftop wind turbines.
Energy research, investing, and strategy firm Veriten is the lead investor in Aeromine Technologies’ Series A funding round.
Aeromine, launched in 2022, makes compact 50 kW or larger “wind harvesting platforms” that it mounts on the edge of a building’s roof. The rooftop wind units, which have no external moving parts or blades, capture wind flowing up and over the building and convert it into onsite electricity. Its generator system is a rotor-stator system with a highly efficient 5 kW permanent magnet generator. (Specs are here.)
The noiseless technology leverages aerodynamics like airfoils on a race car to capture and amplify each building’s airflow to generate energy. Aeromine says its systems typically consist of 20-40 units installed on the edge of a building facing the predominant wind direction.
Each 1,000-pound unit can withstand winds of between 120 and 158 mph depending on specification.
Aeromine’s units can operate independently or be integrated with existing rooftop solar arrays. Onsite power generation eliminates grid supply disruptions.
Maynard Holt, founder & CEO of Veriten, said:
We believe that distributed power innovation will play a vital role in helping companies fulfill their need for reliable, reasonably priced electricity and desire for low-impact power. We’re excited to partner with Aeromine, as its ability to quickly and affordably help a wide variety of companies meet their energy needs with wind resources is unique among distributed energy solutions.
The bladeless wind turbines are designed to power apartment buildings, warehouses, manufacturing facilities, offices, hospitals, retail centers – basically any big box building with a flat, unobstructed roof.
The company says it has 400 qualified projects in its pipeline and expects to roll out commercially in Europe and North America in 2025.
Read more: How renewables could beat natural gas in US generating capacity within 3 years – in numbers
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With changes expected to Ford’s electric vehicle certification program, all Ford dealers will likely be able to sell EVs. Ford is reportedly preparing to open the program amid feedback from its dealers.
Ford poised to open dealers network to sell EVs
After asking dealers to pause EV investments this week, Ford is finalizing changes to the program. Ford already eased requirements last year due to “changes in the market.”
Ford spokesperson Marty Gunsberg confirmed that several dealers opted out of the program this past December. Gunsberg said, “Enrollments for 2024 are just over 50% of the network.” That’s down from about two-thirds confirmed by CEO Jim Farley a year prior.
According to Automotive News, after a series of meetings between dealers and executives, Ford is now preparing to allow all dealers to sell EVs.
Ford is expected to update the financial requirements needed to qualify. Previously, dealers were required to invest at least $500,000 to enroll in the program. For $1.2 million, dealers could be eligible for the “Elite” tier, which included additional chargers, demo units, and a presence on Ford.com.
If dealers didn’t want to invest, they couldn’t sell Ford EVs. Ford’s vice president of EV programs, Lisa Drake, said the company no longer believes having select dealers sell EVs is the right plan.
More dealers want in but with less financial commitment
“What we’re finding is more dealers want to be involved in it and we don’t want to be exclusive to just a handful,” Drake said. “And so we’re making a change where we’re opening up that and not requiring as many certifications or investments for a dealer to participate in the EV revolution.”
Meanwhile, the changes will not be finalized until early June, when Ford meets with its dealer council.
It’s unclear how much Ford will reduce financial requirements to sell EVs, but many believe it will be drastically relaxed to promote participation.
Drake said Ford will be “more ubiquitous with our training and make sure essentially all of our dealers are equipped to sell them” going forward. Ford will need to figure out how to deal with those who have already made investments at the upcoming dealer council meeting.
Ford slashed prices on its popular Mustang Mach-E and F-150 Lightning in recent months to boost sales.
After cutting Mach-E prices by up to $8,100 earlier this year, Ford introduced a new 0% APR offer on 2024 models this week.
| 2024 Mustang Mach-E trim | Range | Starting Price |
| Mustang Mach-E Select | 250 mi | $39,995 |
| Mustang Mach-E Premium | 320 mi | $43,995 |
| Mustang Mach-E GT | 280 mi | $53,995 |
| Mustang Mach-E Rally | 265 mi | $59,995 |
Ford also introduced new discounts on the 2023 F-150 Lightning this week, offering up to $15,000 off MSRP. F-150 Lightning lease prices were cut by over $400 a month.
If you’re in the market for a new EV, now’s the time to start shopping. You can use our links below to find deals on Ford’s electric vehicles at a dealer near you.
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Environment
Podcast: Tesla Cybertruck first driving impressions, Kia EV3, Chevy Silverado EV RST and more
On the Electrek Podcast, we discuss the most popular news in the world of sustainable transport and energy. In this week’s episode, we discuss Fred’s Tesla Cybertruck first driving impressions, Kia EV3, Chevy Silverado EV RST and more.
Today’s episode is sponsored by Momentum, a new brand of lifestyle e-bikes from Giant Group designed to deliver a full range of innovative electric, hybrid and city bikes with premium features, long assist ranges and sensor technologies that offer natural riding experiences that are both energy saving and fun.
Sponsored by SplitVolt: The Splitvolt Splitter Switch automatically shares power from your existing 240V dryer socket with your Level 2 EV charger. Learn more here.
The show is live every Friday at 4 p.m. ET on Electrek’s YouTube channel.
As a reminder, we’ll have an accompanying post, like this one, on the site with an embedded link to the live stream. Head to the YouTube channel to get your questions and comments in.
After the show ends at around 5 p.m. ET, the video will be archived on YouTube and the audio on all your favorite podcast apps:
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Here are a few of the articles that we will discuss during the podcast:
Here’s the live stream for today’s episode starting at 4:00 p.m. ET (or the video after 5 p.m. ET):
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