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.
Mitsubishi is partnering with Ample and Yamoto Transports to deploy an innovative new battery swap network for electric cars in its Japanese home market — but it’s not just for electric cars. Mitsubishi Fuso commercial trucks are getting in on the action, too!
Despite a number of early EV adopters with an overdeveloped concept of ownership, battery swap technology has proven to be both extremely effective and extremely positive to the overall EV ownership experience. And when you see how simple it is to add hundreds of miles of driving in just 100 seconds — quicker, in many cases, than pumping a tank of liquid fuel into an ICE-powered car — you might come around, yourself.
That seems to be what Mitsubishi thinks, anyway, and they’re hoping they’ll be your go-to choice when it’s time to electrify your regional and last-mile commercial delivery fleet(s) by launching a multi-year pilot program to deploy more than 150 battery-swappable commercial electric vehicles and 14 modular battery swapping stations across Tokyo, where the company plans to showcase its “five minute charging” tech in full view of hundreds of commercial fleets and, crucially, the executives of the companies that own and manage them.
A truck like the Mitsubishi eCanter typically requires a full night of AC charging to top off its batteries, and at least an hour or two on DC charging in Japan, according to Fuso. This joint pilot by Mitsubishi, Mitsubishi Fuso Trucks, and Ample aims to circumvent this issue of forced downtime with its swappable batteries, supporting vehicle uptime by delivering a full charge within minutes. The move is meant to encourage the transport industry’s EV shift while creating a depository of stored energy that can be deployed to the grid in the event of a natural disaster — something Mitsubishi in Japan has been working on for years.
Trucks like the eCanter already serve a number of roles throughout the global truck market, including municipal waste collection, regional delivery support, and more.
The pilot is backed by Tokyo Metropolitan Government’s “Technology Development Support Project for Promoting New Energy,” with local delivery operator Yamato Transport testing swappable EVs for delivery operations on both its eCanter light-duty trucks and Mitsubishi Minicab kei-class electric vans.
Electrek’s Take
Electrifying the commercial truck fleet is a key part of decarbonizing city truck fleets – not just here in the US, but around the world. I called the eCanter, “a great product for moving stuff around densely packed city streets,” and eliminating the corporate fear of EV charging in the wild just makes it an even better product for that purpose.
Here’s hoping we see more “right size” electric solutions like this one (and more battery swapping tech) in small towns and tight urban environments stateside somewhat sooner than later.
SOURCES | IMAGES: Mitsubishi, Fuso.
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After becoming the first European brand to offer fully electric versions of every model it sells — and at the same price as the ICE models — Opel is going even further, with a new, AWD electric SUV that should give American Jeep fans hope for a new electric Cherokee!
Now part of the Stellantis, rather than GM portfolio of brands, Rüsselsheim-based Opel showed off the first official pictures of its new Opel Grandland Electric AWD — the company’s first all-electric SUV to feature the “Blitz” performance emblem and all-wheel drive.
“Our top-of-the-range Grandland SUV is a milestone for Opel,” says Opel CEO Florian Huettl. “Customers already have a choice of battery-electric drive, plug-in hybrid and hybrid with 48-volt technology. We are now offering even more choice with the Grandland Electric AWD and thus ensuring that our customers can enjoy maximum efficiency and safety in diverse weather and road conditions, combined with plenty of driving fun.”
Stellantis gets it right in Europe
Opel says its new, AWD Grandland is its most aerodynamically efficient model yet, with a drag coefficient (Cd) of just 0.278. That efficiency, paired with similarly efficient electric motors and a 73 kWh li-ion NMC battery give the electric crossover a 501 km (311 mile) WLTP range, while a combined 325 hp and 375 lb-ft of torque should make for suitably spirited acceleration to go along with all that green cred.
Suspension and handling, too, are promised to deliver on what Opel claims is a “typical” Teutonic driving experience in the Grandland AWD:
Both driving pleasure and comfort are further emphasized by dampers with frequency selective damping technology. This unique technology comes as standard on the Grandland Electric AWD and incorporates a second hydraulic circuit in the damper chamber to mechanically adapt the damping force in relation to the frequency. Depending on the situation, road surface conditions and driving style, it enables different damping characteristics for comfortable gliding at high frequencies – i.e. with short impacts such as on cobblestones or a manhole cover – as well as for a sporty, ambitious driving style with more direct contact with the road at low frequencies. The Grandland reacts even more immediately and directly to any command from the driver and, as is typical for Opel, remains stable when braking, cornering and at high speeds on the Autobahn.
OPEL PRESS RELEASE
The Opel Grandland Electric AWD ships with four standard drive modes that include “normal,” eco, sport, and 4WD mode, which simulates locking axles and true 4×4 off-road performance. The ESP and traction control systems adopt specific settings to enhance grip in 4WD mode as well, and maximum power and torque are instantly available.
Electrek’s Take
As you maybe could tell by now, feeding European Stellantis EVs into an AI image generator and asking it to “make them into Jeeps” is one of my new favorite things to do. This new Opel is no different, and the resulting image (above) paired with the models’ stated specs give me hope that the next wave of Jeep EVs will do better than the Wagoneer S at attracting buyers. All they really need, I think, is the right name — and the right price, to be winners.
SOURCE | IMAGES: Opel.
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Like a 90s “gifted” kid that was supposed to be a lot of things, the electric Jeep Wagoneer S never really found its place — but with dealers discounting the Jeep brands forward-looking flagship by nearly $25,000, it might be time to give the go-fast Wagoneer S a second look.
SKIP THE STORY: get straight to the deals.
Whether we’re talking about Mercedes-Benz, Cerberus, Fiat, or even Enzo Ferrari, outsiders have labeled Jeep as a potentially premium brand that could, “if managed properly,” command luxury-level prices all over the globe. That hasn’t happened, and Stellantis is just the latest in a long line of companies to sink massive capital into the brand only to realize that people will not, in fact, spend Mercedes money on a Jeep.
That said, the Jeep Wagoneer S is not a bad car (and neither is its totally different, hideously massive, ICE-powered Wagoneer sibling, frankly). Built on the same Stellantis STLA Large vehicle platform that underpins the sporty Charger Daytona EVs, the confusingly-named Wagoneer S packs dual electric motors putting out almost 600 hp. That’s good enough to scoot the ‘ute 0 to 60 mph in a stomach-turning 3.5 seconds and enough, on paper, to convince Stellantis executives that they had developed a real, market-ready alternative to the Tesla Model Y.
With the wrong name and a sky-high starting price of $66,995 (not including the $1,795 destination fee), however, that demand didn’t materialize, leaving the Wagoneer S languishing on dealer lots across the country.
That could be about to change, however, thanks to big discounts on Wagoneer S being reported at CDJR dealers in several states, according to our friends at the Car Dealership Guy podcast.
- Jimmy Britt Chrysler Dodge Jeep Ram in Georgia, has a Wagoneer S with an MSRP of $67,590 listed at $43,104 ($24,486 off)
- In Florida, Taverna Chrysler Dodge Jeep Ram Fiat has a $67,590 Wagoneer S slashed to $43,138 ($24,452 off)
- Chris Nikel Chrysler Jeep Dodge Ram Fiat in Oklahoma has a Wagoneer S listed for $43,425 ($24,165 off)
“Stellantis bet big on electric versions of iconic American brands like Jeep and Dodge, but consumers aren’t buying the premise,” writes CDG’s Marcus Amick. “(Stellantis’ dealer body) is now stuck with expensive EVs that need huge discounts to move, eating into already thin margins while competitors focus on [more] profitable gas-powered vehicles.”
All of which is to say: if you’ve found yourself drawn to the Jeep Wagoneer S, but couldn’t quite stomach the $70,000+ window stickers, you might want to check in with your local Jeep dealer and see how you feel about it at a JCPenneys-like 30% off!
Jeep Wagoneer S gallery
SOURCES | IMAGES: Car Dealership Guy, CarScoops, and CarsDirect.
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