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Thanks to careful spending in lower-risk projects with solid returns, U.S. oil supermajor Chevron has the capacity to distribute US$75 billion-US$80 billion in cash to shareholders over the next five years, chairman and CEO Michael Wirth said on Tuesday at the company’s annual Security Analyst Meeting.
Chevron will continue to maintain its annual capital spending in a narrow range of US$19 billion-US$22 billion through 2024, maintaining strict spending discipline, unlike its U.S. rival ExxonMobil, which has been spending a lot to grow production.
The disciplined approach to capex, investments in lower-risk and shorter-cycle projects, and a drive to cut costs are expected to boost Chevron’s adjusted operating cash flow per share by 9 percent each year through 2024, the company said.
“We believe our advantaged portfolio and capital efficiency enable us to grow cash flows and increase returns without relying on rising oil prices. Through continued execution of our strategy, Chevron has the potential to distribute $75 - $80 billion in cash to shareholders over the next five years,” Wirth said in a statement.
In the upstream, Chevron will continue to rely on the Permian, the expansion of its Kazakhstan oil project, and on deepwater Gulf of Mexico opportunities in the long term.
“Our long-term production profile is strong and growing. We have a deep unconventional resource base and expect to see sustained production over 1 million barrels per day in the Permian through 2040 at relatively flat activity levels,” Jay Johnson, executive vice president, Upstream, said.
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Chevron has the lowest cash flow breakeven price among Big Oil, at around US$51 per barrel Brent Crude, the U.S. major said in its investor presentation.
In the annual meeting with analysts, Chevron couldn’t leave out the energy transition theme, although the two U.S. supermajors haven’t been as vocal about cutting emissions as their European rivals.
Chevron said it would increase renewables to support its business, lower its carbon intensity cost efficiently, and invest in potential breakthrough technologies such as alternative fueling infrastructure and carbon capture.
Chevron’s analyst day today will be followed by an Exxon Investor Day on March 5. The two U.S. supermajors will have a lot of questions from analysts to answer to such as what the sub-$50 WTI Crude price means for their Permian business and how they would win in a future of low-carbon energy.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.