“Our strong earnings and cash flows are enabling us to return cash to our stockholders and at the same time, fund a robust capital program, which in 2006 will be the highest annual spend in our history,” Robertson said at the company’s annual meeting, in downtown Houston.
The company also noted the feelings of consumers bearing the weight of rising energy prices.
With record earnings coming at a time of rising fuel prices, Chevron is aware of the need to try to maintain the dialogue with the public about prices, said Dave O’Reilly, the chairman and chief executive of the oil company, which is based in San Ramon, Calif.
“We certainly try, but there is so much emotion,” O’Reilly said in response to a shareholder question. “It is very hard to cut through all that.”
Geopolitical factors
Geopolitical factors are behind some of the rise in prices to around $72 per barrel, he said, adding that taxes and regulatory burdens in the U.S. also help push prices up.
“Everyone wants to point fingers, I’m afraid,” O’Reilly said.
Chevron talked about its plans to bring more oil and natural gas to market. George Kirkland, executive vice president of upstream and gas, predicted production will grow more than 3 percent annually over the next five years.
In 2005, Chevron made 31 new discoveries, with a 58 percent success rate, according to Kirkland.
“Major discoveries were made in the deep-water Gulf of Mexico, Venezuela, Trinidad and Tobago and Nigeria,” he said.
Chevron will also be spending to increase the efficiency of its refineries and will be bringing on several projects to add gasoline-making capacity this year, a Chevron statement quoted Mike Wirth, executive vice president in charge of refining and marketing, as saying.
Hurricanes a worry
But the company is casting a wary eye toward hurricane season because there hasn’t been a full rebound from last year’s storms, O’Reilly said. The company has beefed up its preparations.
“I think we’re about as ready as we can be,” he said. “Let’s hope we don’t have to go through what we did last year.”
Despite having to battle hurricanes, Chevron also grew considerably bigger last year when it acquired Unocal. O’Reilly said the deal has strengthened Chevron’s oil and gas positions in key regions of the world. The integration of those two companies is almost complete.
“The economics are turning out substantially better than forecast,” O’Reilly said.
Oppenheimer analyst Fadel Gheit noted that while some observers last year thought that Chevron paid too much for Unocal, the $18 billion deal turned out to be a great acquisition. The company was smaller than Texaco, which Chevron acquired in 2001, and the integration was accomplished much more quickly, he said.
“Now, in hindsight, it was a steal,” the analyst said. “It is a very nice fit.”
The Unocal board approved the Chevron bid last year after rejecting a more lucrative offer from Chinese oil and gas company CNOOC. The offer by the Chinese triggered regulatory concerns and strong opposition from members of Congress because CNOOC is 70 percent owned by China’s communist government.
Protests over Ecuador
At the meeting, Chevron faced protesters from another corner of the globe: South America. Emergildo Criollo, a leader of an indigenous tribe in Ecuador, speaking through an interpreter, alleged that his tribe is dying because of toxic contamination left from Texaco’s former concession in the the Amazon rain forest.
O’Reilly countered that the blame for that lies with the Ecuadorean government and its national oil company, not Chevron.
Also on Wednesday, Chevron’s board of directors declared a quarterly dividend of 52 cents per share, an increase of 15.5 percent. Chevron said it has increased its annual dividend payment for 19 straight years.
