Chevron board approves buyback of stock worth $15 billion

The Board of Directors of Chevron Corp., the second-largest U.S. oil company has agreed to acquire up to $15 billion of the company's common stock over a period of up to three years. The oil giant has already accomplished three stock buybacks of $5 billion each in 2005, 2006 and September 2007 respectively.

"Our continuing strong cash flows have enabled us to fund a significant capital program budgeted at almost $20 billion in 2007, increase dividends to our stockholders, repurchase our shares in the market and reduce the company's debt," said Chevron Chairman and CEO Dave O'Reilly. "We believe it is appropriate to continue to return cash to our stockholders through share repurchases."

With a budget of $15 million Chevron should be able to buy more than 163 million shares, given the closing price of yesterday. It will make up about 7 per cent of the San Ramon, Calif. based oil company’s market capitalization.

Buyback of stocks has become a trend for oil companies who seek to raise the value of their shares as rising energy prices help boost earnings. With repurchase of stock the value of equity in a company is improved as are the earnings per share.

Exxon Mobil Corp., the world's largest oil company and Chevron’s rival has also used stock buybacks in recent years to pass on the extra profits. Irving, Texas based Exxon repurchased stock worth $15.1 billion, in the first half of this year. Last year, the company had showered $32.6 billion on shareholders through dividends and share purchases.

Chevron went up $1.11, or 1.2 percent, to $92.99 at 8:30 a.m. New York time in trading before the U.S. stock exchanges opened. The stock has climbed 25 percent this year. Exxon traded at $91.96.