Chevron plans to grow its free cash flow into the next decade as it focuses on higher profits and returns to shareholders instead of growing oil and production, the U.S. supermajor’s five-year plan to 2030 showed on Wednesday.
Chevron will raise output, but its primary focus will be on boosting free cash flow and earnings per share via deeper cost cuts, synergies from the Hess acquisition, and reduced capital expenditure (capex).
“Chevron expects to maintain capital and cost discipline while investing to extend cash flow growth into the next decade,” the second-biggest U.S. oil and gas firm said today.
The supermajor expects to grow oil and gas production by 2% to 3% annually through 2030 and improve return on capital employed by over 3% by 2030 at $70 per barrel Brent.
In the near term, Chevron expects to boost synergies from the Hess acquisition to $1.5 billion and structural cost reductions to $3 billion-$4 billion by the end of 2026.
The company also expects to keep its capex and dividend breakeven below $50 per barrel Brent through 2030.
“We believe Chevron is uniquely positioned to grow earnings and free cash flow into the next decade,” chairman and CEO Mike Wirth said.
“Never in my career have I seen a higher confidence outlook, further into the future and with lower execution risk; Chevron is stronger, more resilient, and better positioned than ever.”
CFO Eimear Bonner commented that “Chevron’s sustained cash generation underpins superior shareholder returns.”
In an interview with the Financial Times, Bonner said “We’re focused on growing free cash flow, not volume. That’s the difference.”
Chevron’s new five-year strategic plan is much more value-focused and “it’s not a volume story for us, it’s a value story,” Bonner told FT.
The supermajor also targets to deliver its first AI data center power project in West Texas, targeting first power in 2027.
Chevron’s approach to new energies is pragmatic, with a focus on its core strengths.
“We are excited about our new power business, where we have an early-mover advantage and look forward to providing the power required to support U.S. leadership in Artificial Intelligence,” Jeff Gustavson, president of Chevron New Energies, said in a statement.
By Michael Kern for Oilprice.com
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