Chevron's (CVX) stay-the-course approach to keep spending ~$40B/year for the next several years on new gas projects to lift continually flat production, even after a 32% drop in quarterly earnings, spooked investors today, sending shares -4.1% to 52-week lows.
CVX is betting that its relatively high dividend yield and its large stock buyback program will appease investors until some of its major projects, including two massive liquefied natural gas projects in Australia and deepwater wells in the Gulf of Mexico, are online.
"It's a treadmill," says Oppenheimer's Fadel Gheit. "Yes, all these new projects will add oil. But... until they hit that goal, their base line production is declining."
Shell's "capitulation to activist investors" promises to send shivers through the big oil industry where underperformance has become endemic, FT's Nick Butler writes.