Kenneth T. Derr, chairman and chief executive of Chevron Corp., broke his silence Friday amid persistent rumors that the company might be a takeover or restructuring target and blasted news reports that management had done too little to protect shareholder interests.
"I do not intend to change our policy of not commenting about speculation or recent stock market activity," Derr said in a lengthy statement. But, he said, management has taken significant steps to reduce debt, raise dividends, increase oil and gas reserves and strengthen the company for the long term.
Derr's statement came in response to unspecified news reports as new rumors emerged concerning weeks of heavy trading of Chevron stock. The stock closed up 62 1/2 cents Friday at $68.625 per share on trading of 1,572,300 shares, again placing it among the New York Stock Exchange's volume leaders.
Analysts saw the statement as an effort to reassure investors that management was in fact making changes at the company that has seen profits suffer recently.
Chevron has reduced its debt ratio to between 30% and 35% from 50% after its $13.3-billion buyout of Gulf Corp. in 1984. In addition, the company has raised quarterly stockholder dividends twice in the past 18 months and increased proved oil and gas reserves by 65%, Derr said.
The company is also embarking on a five-year program to improve returns to shareholders, which suffered in much of the 1980s as Chevron paid down debt, assimilated Gulf and struggled with depressed oil prices.
So far, no one has admitted buying up Chevron shares, and analysts were beginning to doubt earlier rumors that Pennzoil Co. would make a serious run at the company, or even buy up enough shares to trigger a public filing with the Securities and Exchange Commission. Pennzoil and Chevron have declined to discuss such rumors.
But that didn't stop speculation Friday that Chevron might start buying up Pennzoil shares in a ploy to get Pennzoil off its back--speculation that many analysts dismissed out of hand.
"We don't even know if Pennzoil owns Chevron stock," said Michael Barbis, an analyst with Drexel Burnham Lambert Inc. in New York.
Moreover, he said, "Pennzoil is basically not really in a position to take over Chevron, so why would (Chevron) need to buy them?"
Pennzoil stock closed on the New York Stock Exchange at $80.625, down 62 1/2 cents in trading of 215,600 shares.