U.S. oil major Chevron expects significant cashflow growth and production boost over the next five years.
Outlining its strategy on Tuesday, Chevron CEO Michael Wirth said: “Chevron is in an exceptional position to deliver industry-leading value to shareholders,” said Michael Wirth, Chevron’s chairman and chief executive officer.
“Our advantaged portfolio is driving strong production growth with lower execution risk, higher cash flow and increased cash returns to shareholders.”
According to the CEO, Chevron has refocused its investment priorities and expects 70 percent of 2019’s spend to deliver cash flow within two years.
Chevron has said it has reaffirmed “a disciplined C&E program” and established an annual target of $19 to $22 billion from 2021 to 2023.
Jay Johnson, executive vice president, upstream, said: “the ratable investment will deliver steady growth.”
“We expect to deliver a three to four percent compound annual production growth rate through 2023,” he said. “Our strong resource base gives us the flexibility and choices that allow us to fund the projects we believe will yield the best returns.”
Chevron said its outlook is supported by strong performance in the Permian Basin, onshore in the U.S., where the company has added almost 7 billion barrels of resource and says it has 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,” Chevron said.
“The company’s unique position in the Permian is “characterized 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.
$30 billion cash generation at $60 brent
Chevron expects approximately $30 billion of cash generation at $60 Brent in 2019 to be used to fund the 6 percent annual dividend increase, a ratable and high-return capital program, and $4 billion of expected share repurchases, Chevron said.
“Chevron is operating from a position of strength,” Wirth added. “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.”