Chevron Corporation expects a significant growth, disciplined spending, and expanded production over the next five years.
It stated this at its Security Analyst meeting.
It expects approximately $30 billion generation at $60 for Brent in the year to fund the six per cent yearly dividend increase, a high-return capital programme, and $4 billion of expected share repurchase.
Chevron also projected a capital and exploratory (C&E) expenditures of $19 to $22 billion from 2021 to 2023, three to four per cent compound yearly production growth through 2023, Permian unconventional production of 900,000 barrels per day in 2023 and six per cent shareholder yield in 2019. The projections, according to the company, are based on strong performance.
“Chevron is in an exceptional position to deliver industry-leading value to shareholders,” said Michael Wirth, Chevron’s chairman/chief executive officer.
“Our advantaged portfolio is driving strong production growth with lower execution risk, higher cash flow and increased cash returns to shareholders,” he added.
The company outlined a ratable capital programme and a returns-driven approach to capital allocation. “We’ve refocused our investment priorities,” said Wirth, “and expect 70 per cent of this year’s spend to deliver cash flow within two years.” The Company reaffirmed a disciplined C&E programme and established an annual target of $19 to $22 billion from 2021 to 2023.
Executive Vice President, Upstream, Jay Johnson, explained the ratable investment will deliver steady growth. “We expect to deliver a three to four percent compound annual production growth rate through 2023. Our strong resource base gives us the flexibility and choices that allow us to fund the projects we believe will yield the best returns,” he said.
Chevron’s outlook is supported by strong performance in the Permian Basin, where the company has added almost seven billion barrels of resource and doubled its portfolio value over the past two years. Permian unconventional net oil-equivalent production is now expected to reach 600,000 barrels per day by the end of 2020, and 900,000 barrels per day by the end of 2023.
The company’s unique position in the Permian is “characterised by long-held acreage, zero-to-low royalty on more than 80 percent of our land position, and minimal drilling commitments”, said Johnson. These attributes together with the deployment of new technologies are driving higher returns, stronger cash flows, and increased value.
“Chevron is operating from a position of strength,” Wirth said, ading: “The balance sheet is strong. Our dividend breakeven is low. We’re disciplined with capital. And we’re generating strong free cashflow. Chevron has an extremely compelling investment proposition that is going to continue over the long-term.”
Authored By: Emeka Ugwuanyi