Chevron CEO under pressure to halt share slide as Hess deal stalls

Marianna Parraga - Reuters - 31/10
Five years ago, Chevron CEO Michael Wirth won Wall Street acclaim as the No. 2 U.S. oil company briefly achieved a market value larger than Exxon Mobil's after he refused to get into a bidding war with Occidental Petroleum over a rival.
  • Chevron earnings fail to cover dividends, buybacks
  • Delayed Hess deal a drag on the company's share price
  • Guyana volumes crucial for long-term oil output gains
HOUSTON, Oct 31 (Reuters) - Five years ago, Chevron CEO Michael Wirth won Wall Street acclaim as the No. 2 U.S. oil company briefly achieved a market value larger than Exxon Mobil's after he refused to get into a bidding war with Occidental Petroleum over a rival.
He was ahead of the game when the pandemic hit oil and gas demand, forcing rivals to make deep cutbacks that Wirth had already tackled at Chevron. Its shares had outperformed rivals for five years until 2022.
Fast forward to 2024 and Wirth's legacy is in danger. Chevron’s falling earnings no longer cover its dividends and buybacks. Project overruns in Kazakhstan and Australia have cost the company billions.
The CEO is also locked in a must-win arbitration battle with Exxon Mobil (XOM.N), opens new tab that has held up his $53 billion purchase of Hess (HES.N), opens new tab, a deal that would give Chevron a stake in a lucrative Guyana oilfield that Exxon operates.
Exxon's challenge has delayed the deal by almost two years, and threatens to kill it entirely by asserting a right of first refusal over a sale of the Guyana properties.
Chevron shares are up 18% since Wirth took over as CEO in 2018, compared to Exxon's 31% gain over the same period.
Wirth's job is not at risk, say Chevron executives and industry sources. The board granted him a retirement-age waiver more than a year ago as he began a sweeping overhaul of top managers.
But "If you have $1 to invest in an oil company now, how would you justify investing it in Chevron?," said Mark Kelly, an analyst with the financial firm MKP Advisors in London. "The Hess deal delay has left Chevron with no clear (business) growth story to tell."
Jake Spiering, Chevron's head of investor relations, said the company's share performance this year has been hurt by the arbitration case that has encouraged arbitrage traders to short Chevron.
"The Chevron story is coming. This growth, and earnings, and cash inflection is coming," Spiering said. Chevron is poised to deliver the highest production growth rate in the industry over the next 12 months by expanding existing projects, he said.
The board is pressing for a faster turnaround of earnings, according to people familiar with the board's thinking who requested anonymity as board discussions are private. Profits have declined for the past five quarte...
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