Michael Wirth, CEO, Chevron, on January 23, 2020 at the World Economic Forum in Davos, Switzerland.
Adam Galica | CNBC
Chevron CEO Michael Wirth told CNBC that he had not spoken to Berkshire Hathaway since the company took an interest in the oil giant, but said the decision indicated confidence in Chevron’s long-term future.
“I can deduce nothing but their investment decision, which indicates that there is confidence in our company’s long – term future and our ability to generate long – term value for shareholders,” Wirth said on CNBC’s “Closing Bell”.
“I look forward to meeting with them in the coming weeks and months,” he added.
Berkshire began building a position in Chevron during the fourth quarter of 2020, accumulating more than 48 million shares of the oil giant by the end of last year, according to documentation from the Securities and Exchange Commission.
Berkshire’s annual letter to shareholders states that the Chevron position is worth about $ 4 billion from the fourth quarter, making it one of the firm’s top ten holdings.
“I believe that Chevron is an excellent long-term investment for any investor, which is why we definitely welcome the investment of Berkshire Hathaway in our company. They are known as a long-term investor and a value-oriented investor and one we are very pleased that we is in our stock, ‘said Wirth.
His comments follow Chevron’s annual investor day, during which the company promised higher returns and lower carbon emissions in the future. Shares of the company reached their highest level in a year on Tuesday before finally dropping the session by 0.23%.
For the year, the share rose by almost 30% amid a revolution in the struggling energy sector, although the share was about 19% lower than its everyday high from 2014.
After a cruel year for the energy sector in general when oil prices have never before reached lows, Chevron has implemented aggressive cost-cutting measures and significantly reduced its capital expenditure plan. During its investor day, the company set out an optimistic vision to more than double the return on capital in 2025, and to increase free cash flow by more than 10% annually by that year.
“We are seeing markets recovering. Demand is returning as the pandemic gradually improves control and supply is somewhat limited by OPEC and OPEC +, so excess inventory is declining and prices reflect this gradual shift to a more equilibrium market,” he said. Wirth told CNBC.