- Targets more than doubling return on capital employed by
2025
- Expects free cash flow to grow more than 10% per year by
2025
- Increases expected Noble synergies to $600 million, twice
the initial estimate
- Targets 35% carbon intensity reduction by 2028
At its annual investor meeting today, Chevron Corporation (NYSE:
CVX) announced plans to increase return on capital employed and
lower carbon intensity to enable superior distributions to
shareholders.
“Chevron’s message to investors is summarized in four words –
higher returns, lower carbon,” said Michael Wirth, Chevron’s
chairman and CEO. “We’re building on our track record of capital
and cost discipline to deliver higher returns. And we’re taking
action to advance a lower carbon future.”
Higher Returns
Chevron will continue to drive a disciplined capital and cost
program to deliver higher returns for shareholders. In line with
this objective, the company announced it has:
- Reaffirmed its 2021-2025 guidance for organic capital and
exploratory expenditures of $14 billion to $16 billion.
- Doubled its initial estimate of Noble synergies to $600
million, which contributes to an expected reduction in 2021
operating expenses of 10% from 2019.
The combination of a more capital efficient investment program
and lower costs is expected to result in a doubling of the
company’s return on capital employed and 10% CAGR of free cash flow
by 2025 at $50 Brent.
“The path to increase return on capital employed is
straightforward – invest in only the highest-return projects and
operate cost efficiently,” said Pierre Breber, Chevron’s CFO.
“Capital discipline and cost efficiency always matter. We have the
portfolio and investments that position us to increase returns and
grow free cash flow.”
Over the next five years, as capital is expected to decrease for
its major expansion in Kazakhstan, the company expects to increase
its investment in a number of Chevron’s attractive assets,
including its world class position in the Permian.
“Our Permian Basin asset is advantaged relative to others. The
long-term outlook is positive and capital efficiency is improving,”
said Jay Johnson, executive vice president, Upstream. “We expect to
grow production while generating strong free cash each year along
the way.”
In Kazakhstan, the FGP-WPMP project is 81% complete and
remobilization of project staff continues to progress. “We remain
focused on sustaining our pandemic mitigation measures and
increasing productivity at Tengiz,” Johnson said. “Executing our
2021 work program, amidst the pandemic, will be an important
signpost for the project’s budget and schedule.”
Lower carbon
The company exceeded its 2023 upstream carbon intensity
reduction targets three years ahead of schedule and today announced
lower 2028 targets and zero routine flaring by 2030. The new
targets align with the second stock-take period under the Paris
Agreement and include all of Chevron’s production on an
equity-basis:
- 24 kg CO2e / boe for oil and gas GHG intensity; a combined 35%
reduction from 2016
- 3 kg CO2e / boe for overall flaring intensity; 65% lower than
2016
- 2 kg CO2e / boe for methane intensity; 50% lower than 2016
“Our energy transition strategy is focused on actions that are
good for both society and shareholders,” said Bruce Niemeyer, vice
president of Strategy & Sustainability, “Achieving our 2028
goals is expected to keep Chevron a top quartile oil and gas
producer in terms of carbon intensity.”
In addition, the company updated plans to increase renewable
energy and carbon offsets and to invest in low-carbon technologies
such as hydrogen and carbon capture, utilization and storage. Over
the past several weeks, Chevron launched its second Future Energy
Fund with an initial commitment of $300 million and announced a new
bioenergy partnership in California with Schlumberger and
Microsoft, designed to qualify as carbon negative.
“We released our third TCFD-aligned climate report today, which
details how Chevron plans to deliver long-term value in a lower
carbon future,” Wirth said. “We expect to invest more than $3
billion in the coming years to advance our energy transition
strategy.”
For more information about Chevron’s approach to the energy
transition, please see Chevron’s Climate Change Resilience report
found here.
Upside leverage and downside resilience
With its industry leading balance sheet and flexible capital
program, Chevron is positioned to reward investors in any
environment. At a Brent oil price average of $60 per barrel, the
company expects to earn double-digit return on capital and generate
cash, above its dividend and capital spending, greater than $25
billion over the next five years. At a Brent oil price average of
$40 per barrel over the next 5 years, the company expects its net
debt ratio to peak around 35% while sustaining the dividend.
“Even through these challenging times, Chevron maintained its
financial strength and capital discipline,” Wirth concluded. “Our
strategy positions Chevron to return cash to shareholders today and
into the future.”
Webcast
Chevron will conduct a webcast on Tuesday, March 9, 2021 at
10:00 a.m. ET to discuss the company’s strategy at the annual
investor meeting.
A webcast of the discussion will be available in listen-only
mode to individual investors, media, and other interested parties
on Chevron’s website at www.chevron.com under the “Investors”
section. Presentations and full transcript of the meeting will also
be available on the Investor Relations website.
Chevron Corporation is one of the world's leading integrated
energy companies. Through its subsidiaries that conduct business
worldwide, the company is involved in virtually every facet of the
energy industry. Chevron explores for, produces and transports
crude oil and natural gas; refines, markets and distributes
transportation fuels and lubricants; manufactures and sells
petrochemicals and additives; generates power; and develops and
deploys technologies that enhance business value in every aspect of
the company's operations. Chevron is based in San Ramon,
California. More information about Chevron is available at
www.chevron.com.
NOTICE
As used in this news release, the term
“Chevron” and such terms as “the company,” “the corporation,”
“our,” “we” and “us” may refer to Chevron Corporation, one or more
of its consolidated subsidiaries, or to all of them taken as a
whole. All of these terms are used for convenience only and are not
intended as a precise description of any of the separate companies,
each of which manages its own affairs.
CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION
FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
This news release contains forward-looking statements relating
to Chevron’s operations that are based on management's current
expectations, estimates and projections about the petroleum,
chemicals and other energy-related industries. Words or phrases
such as “anticipates,” “expects,” “intends,” “plans,” “targets,”
“forecasts,” “projects,” “believes,” “seeks,” “schedules,”
“estimates,” “positions,” “pursues,” “may,” “could,” “should,”
“will,” “budgets,” “outlook,” “trends,” “guidance,” “focus,” “on
schedule,” “on track,” “is slated,” “goals,” “objectives,”
“strategies,” “opportunities,” “poised,” “potential” and similar
expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and
other factors, many of which are beyond the company’s control and
are difficult to predict. Therefore, actual outcomes and results
may differ materially from what is expressed or forecasted in such
forward-looking statements. The reader should not place undue
reliance on these forward-looking statements, which speak only as
of the date of this news release. Unless legally required, Chevron
undertakes no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise.
Among the important factors that could cause actual results to
differ materially from those in the forward-looking statements are:
changing crude oil and natural gas prices and demand for our
products, and production curtailments due to market conditions;
crude oil production quotas or other actions that might be imposed
by the Organization of Petroleum Exporting Countries and other
producing countries; public health crises, such as pandemics
(including coronavirus (COVID-19)) and epidemics, and any related
government policies and actions; changing economic, regulatory and
political environments in the various countries in which the
company operates; general domestic and international economic and
political conditions; changing refining, marketing and chemicals
margins; the company’s ability to realize anticipated cost savings,
expenditure reductions and efficiencies associated with enterprise
transformation initiatives; actions of competitors or regulators;
timing of exploration expenses; timing of crude oil liftings; the
competitiveness of alternate-energy sources or product substitutes;
technological developments; the results of operations and financial
condition of the company’s suppliers, vendors, partners and equity
affiliates, particularly during extended periods of low prices for
crude oil and natural gas during the COVID-19 pandemic; the
inability or failure of the company’s joint-venture partners to
fund their share of operations and development activities; the
potential failure to achieve expected net production from existing
and future crude oil and natural gas development projects;
potential delays in the development, construction or start-up of
planned projects; the potential disruption or interruption of the
company’s operations due to war, accidents, political events, civil
unrest, severe weather, cyber threats, terrorist acts, or other
natural or human causes beyond the company’s control; the potential
liability for remedial actions or assessments under existing or
future environmental regulations and litigation; significant
operational, investment or product changes required by existing or
future environmental statutes and regulations, including
international agreements and national or regional legislation and
regulatory measures to limit or reduce greenhouse gas emissions;
the potential liability resulting from pending or future
litigation; the company's ability to achieve the anticipated
benefits from the acquisition of Noble Energy; the company’s future
acquisitions or dispositions of assets or shares or the delay or
failure of such transactions to close based on required closing
conditions; the potential for gains and losses from asset
dispositions or impairments; government mandated sales,
divestitures, recapitalizations, industry-specific taxes, tariffs,
sanctions, changes in fiscal terms or restrictions on scope of
company operations; foreign currency movements compared with the
U.S. dollar; material reductions in corporate liquidity and access
to debt markets; the receipt of required Board authorizations to
pay future dividends; the effects of changed accounting rules under
generally accepted accounting principles promulgated by
rule-setting bodies; the company’s ability to identify and mitigate
the risks and hazards inherent in operating in the global energy
industry; and the factors set forth under the heading “Risk
Factors” on pages 18 through 23 of the company's 2020 Annual Report
on Form 10-K and in other subsequent filings with the U.S.
Securities and Exchange Commission. Other unpredictable or unknown
factors not discussed in this news release could also have material
adverse effects on forward-looking statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210309005302/en/
Braden Reddall, +1 925-842-2209
Chevron (NYSE:CVX)
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