Chevron CEO Shoots Down Acquisition Rumors

SAN RAMON, Calif. – Chevron Corp. Chairman and CEO John Watson was questioned during the company’s 2012 fourth-quarter earnings call this morning about what its plans to do with its massive cash stockpile, which totaled $21 billion at the end of last year.

As CSNews Online previously reported, media reports in August speculated that such a large cash stockpile in today’s low-interest-rate environment signaled Chevron could be making a major acquisition. Possible targets mentioned included rival Hess Corp. and Chesapeake Energy Corp. 

During today’s call, however, Watson shot down those acquisition rumors. “Our goals are to sustain and grow our dividend, watch for changes in commodities markets and buy back [our] shares,” he relayed. “You will see our cash position come down in the future.”

The second-largest U.S. oil company earned a net profit of $7.2 billion in its latest quarter, which ended Dec. 31. That compares to a $5.1 billion profit during Chevron’s 2011 fourth quarter. For the entire 2012 year, Chevron’s profit reached $26.2 billion vs. $27 billion in 2011.

Its Downstream division achieved a $331 million net profit for the fourth quarter vs. a loss of $204 million during the same quarter in 2011. Although the company does not break out its earnings specifically regarding its convenience store division, Vice President and Chief Financial Officer Pat Yarrington noted during the conference call that marketing margins were strong in its latest quarter.

In other company news, Chevron will realign its Gas and Midstream business by consolidating the company's supply and trading functions into a single supply and trading group within the Gas and Midstream organization. Previously, Chevron's Downstream organization oversaw the company's trading operations for crude oil and refined products, while the Gas and Midstream business was responsible for Chevron's natural gas and liquefied natural gas trading operations.

“These changes will more tightly integrate our supply and trading activities and allow our Gas and Midstream organization to create value across our upstream and downstream assets," Watson said in a prepared statement. He did not expand on the topic during the earnings call.

Joseph C. Geagea will lead the new organization and retain his title as corporate vice president and president, Chevron Gas and Midstream.