PWW

Portfolio AI Insights

Energy

total 0 page

Chevron Corporation

Chevron Corporation's Guidance and Outlook

Overall Financial Priorities

  • Dividend Growth: Chevron remains committed to sustaining and growing its dividend. The company has a 36-year track record of increasing dividends, with an 8% increase announced for 2024, subject to Board approval.
  • Capital Discipline: The company emphasizes disciplined organic reinvestment to drive returns and value. This includes maintaining a strong balance sheet with a net debt ratio expected to move back towards the 20%-25% gearing range over time.
  • Share Repurchases: Chevron plans to continue its share repurchase program at a high level, aiming for $17.5 billion annually post-Hess acquisition, which represents 5%-6% of its float each year.

Production Guidance

  • Full-Year 2024: Chevron expects production to grow by 4%-7% year-over-year. This includes contributions from the Permian Basin, the DJ Basin, and the Gulf of Mexico.
  • Permian Basin:
    • 2024 Exit Rate: The company aims to exit 2024 with a production rate of around 900,000 barrels per day (bpd).
    • 2025 Target: Chevron anticipates reaching 1 million barrels of oil equivalent per day (boe/d) in 2025.
    • Capital Allocation: The company plans to maintain capital spending at around $5 billion for Permian operations, with a focus on efficiency and productivity improvements.
  • DJ Basin: Production is expected to hold at a plateau around 400,000 boe/d through the end of the decade.
  • Gulf of Mexico: Chevron expects production to grow to 300,000 bpd by 2026, driven by projects like Anchor, Jack/St. Malo, and Tahiti.
  • TCO (Tengizchevroil):
    • 2024 Forecast: Production is expected to be about 50,000 boe/d lower than 2023 due to a heavier turnaround schedule and planned downtime for WPMP conversions.
    • 2025 Outlook: TCO is expected to reach greater than 1 million boe/d when FGP fully ramps up, generating free cash flow of more than $4 billion at $60 Brent.

Capital Expenditures (CapEx)

  • 2024 Guidance: Chevron's CapEx guidance remains unchanged at $15.5 billion to $16.5 billion.
  • Long-Term Strategy: The company plans to maintain a long-term capital spend around $16 billion, with a focus on the most attractive opportunities. The majority of the spend is still allocated to traditional energy businesses, with a smaller portion ($10 billion over 2022-2028) dedicated to new energies like hydrogen, carbon capture, and renewable fuels.

Project Updates

  • Anchor Project (Gulf of Mexico): First oil is expected in mid-2024, with production ramping up over the following years.
  • Future Growth Project (FGP) at TCO: Expected to start up in the first half of 2025, with ramp-up to full production within 3 months. The project cost is expected to increase by 3%-5%, primarily due to delays and complexities in commissioning.
  • Permian Basin: Chevron is focused on improving drilling and completion efficiency, with plans to add a fourth frac crew in the second half of 2024.
  • Permian Highway: Constraints on takeaway capacity have been resolved, ensuring no further unplanned downtime.

Asset Sales and Portfolio Optimization

  • Targeted Divestitures: Chevron plans to divest non-core assets, contributing to a high-graded portfolio. Asset sales are expected to generate proceeds of approximately $8 billion before taxes in the fourth quarter of 2024.
  • Venezuela: Production is expected to increase to around 150,000 bpd by year-end 2024, with cash flow modestly contributing to overall corporate cash flow.

Downstream and Chemicals

  • Refining Margins: Chevron expects continued pressure on refining margins, particularly in the U.S., due to high inventories and new refining capacity coming online.
  • Chemicals Business: Polyethylene chain margins have strengthened, and the company remains optimistic about the long-term fundamentals of the chemicals sector, with projects coming online in the second half of the decade.

Environmental and Transition Initiatives

  • Lower Carbon Intensity: Chevron continues to focus on reducing the carbon intensity of its operations, with advancements in CO2 storage and lower carbon technologies.
  • New Energies Investments: The company has committed to spending about $10 billion on new energies over 2022-2028, with $8 billion allocated to emerging business lines like carbon capture, renewable fuels, and hydrogen.

Hess Acquisition

  • Expected Close: The acquisition is anticipated to close in the first half of 2024, pending FTC review and arbitration.
  • Integration Plans: Upon closing, Chevron plans to integrate Hess's assets and update its business plan to reflect the combined portfolio. The company expects to move from a $17.5 billion annual buyback rate to the top end of the $20 billion range, reflecting confidence in the merged entity's cash-generative capacity.

Regional Developments

  • Eastern Mediterranean: Despite short-term challenges, Chevron remains committed to long-term growth opportunities in the region, including expansions at Tamar and Leviathan.
  • West Africa: The company has exploration plans in Namibia and Angola, with drilling activities expected to commence in late 2024 or early 2025.

Conclusion

Chevron's guidance and outlook reflect a focus on maintaining strong financial discipline, delivering consistent shareholder returns, and executing on key projects to drive long-term growth. The company is well-positioned to navigate commodity price volatility and deliver value through its integrated business model.

Last updated on 01/14/2025 05:14 AM

Feedback