Michael Wirth, CEO of Chevron, speaking at the World Economic Forum in Davos, Switzerland, on January 23, 2020.
Adam Galica | CNBC
Chevron CEO Michael Wirth told CNBC he has not spoken to Berkshire Hathaway since the firm became involved in the oil giant, but said the decision suggests confidence in Chevron’s long-term future.
“I can’t deduce anything that your investment decision suggests that there is some confidence in our company’s long-term future and our ability to generate long-term shareholder value,” Wirth told Closing Bell “from CNBC.
“I look forward to meeting with them in the coming weeks and months,” he added.
Berkshire began building a position at Chevron during the fourth quarter of 2020 and by the end of last year had accumulated more than 48 million shares of the oil giant, according to statements submitted to the Securities and Exchange Commission.
Berkshire’s annual letter to shareholders stated that as of the fourth quarter, Chevron’s position was worth $ 4 billion north, making it one of the firm’s top ten holdings.
“I think Chevron is a great long-term investment for any investor and therefore welcome is Berkshire Hathaway’s investment in our company. They are known as long-term investors and value-oriented investors and that we are very glad to have it in our stock, ”Wirth said.
His comments followed Chevron’s annual investment day, during which the company pledged higher yields and lower carbon emissions in the future. The company’s shares reached their highest level in a year on Tuesday, before closing the session 0.23%.
For the year, shares have risen by almost 30% amid a rotation towards the defeated energy sector, although shares are about 19% below the all-time high compared to 2014.
After a brutal year for the energy sector, as oil prices fell to unprecedented lows, Chevron implemented aggressive cost-cutting measures and significantly reduced its capital spending plan. During Investors Day, the company set out an optimistic view of more than double the return on capital employed in 2025 and the growth of free cash flow in excess of 10% per year for that year.
“We see markets that are healing. Demand is growing again, as the pandemic is gradually coming under control and OPEC and OPEC have somewhat limited supply, so excess inventory is declining and prices reflect this progressive step toward more state markets, “Wirth told CNBC.