Michael Wirth, CEO, Chevron, speaks at the World Economic Forum in Davos, Switzerland, January 23, 2020.
Adam Galica | CNBC
Chevron CEO Michael Wirth told CNBC he has not spoken to Berkshire Hathaway since the company took a stake in the oil giant, but said the decision suggests confidence in Chevron’s long-term future.
“I cannot infer anything other than that their investment decision would suggest that there is some confidence in the long-term future of our company and our ability to generate long-term value for shareholders,” Wirth said on CNBC’s “Closing Bell.”
“I look forward to meeting them in the coming weeks and months,” he added.
Berkshire began building a position in Chevron in the fourth quarter of 2020 and had amassed more than 48 million shares of the oil giant by the end of last year, according to filings with the Securities and Exchange Commission.
The annual letter to Berkshire shareholders stated that Chevron’s position was worth more than $ 4 billion as of the fourth quarter, making it one of the company’s top ten holdings.
“I believe Chevron is a great long-term value investment for any investor, which is why we certainly welcome Berkshire Hathaway’s investment in our business. They are known as a long-term investor and a value-oriented investor and we’re very pleased that we have it in our stock, ”Wirth said.
His comments followed Chevron’s annual investor day, when the company promised higher returns and lower CO2 emissions in the future. Shares of the company hit their highest level in a year on Tuesday, before finally closing the session at 0.23%.
For the year, the stock is up nearly 30% as a result of a spin to the downturned energy sector, although the stock is about 19% below its all-time high of 2014.
After a brutal year for the energy sector in general, in which oil prices plunged to unprecedented lows, Chevron implemented aggressive cost-cutting measures and significantly reduced its investment plan. During the investor day, the company expressed an optimistic vision to more than double the return on capital employed by 2025 and grow free cash flow by more than 10% per year by that year.
“We see markets that are healing. Demand is coming back as the pandemic gradually gets better under control and supply is somewhat constrained by OPEC and OPEC +, so surplus stocks are falling and prices are reflecting this gradual move back to a more equilibrium state. markets, ”Wirth told CNBC.