Chevron targets 10% cash flow growth annually through 2030 and higher cost reduction

Chevron announced on Wednesday its plans to increase free cash flow and oil and gas production by over 10% per year through 2030, and reduce costs and capital expenditures.

Chevron announced new guidance on its investor day as part of an effort to improve the efficiency of the company following a restructuring earlier this year that included layoffs.

After a delay of a year, the company completed its acquisition of Hess for $55 billion in July. This had prevented it to give long-term financial advice until now. Its shares are up 7.8% so far this year, but they're still behind rival oil producers Exxon Mobil & Shell.

In a press release, Chief Financial Officer Eimear Boner said that "our advantaged assets and balance sheet strength provide the foundation for us to thrive in any market environment."

Chevron expects its free cash flow to increase by 10% per year, and that earnings per share will grow by over 10% per annum if Brent crude is priced at $70 per barrel.

Chevron has stated that oil and gas production is expected to grow between 2% and 3% annually. Chevron currently produces 4.1 millions barrels of oil-equivalent per day.

TECHNOLOGY AND RESTRUCTURING CAN HELP YOU CUT MORE COSTS

Chevron has reduced its planned capex expenditures to an annual range of $18 billion to $21 billion, compared with the previous guidance between $19 billion to $22 billion.

The company has also raised its planned cost savings to between $3 and $4 billion before the end of the next year. This is an increase of $1 billion over the previous target.

Bonner stated in an interview that upstream divestments will result in $2 Billion in cost savings by the end of the year. She said that using technology to monitor operations remotely and across the entire business will save an additional $1 billion.

Bonner stated, "We are confident of increasing the range because we have already done half the work with what is underway."

Chevron has said that it can cover its capex costs and dividends through 2030, even if Brent crude oil prices hover around $50 per barrel.

POWER EXPLORATION AND PROJECTS: FORging ahead

The first Chevron project that will use natural gas to power an AI Data Center in West Texas is slated for completion by 2027. Bonner stated that negotiations are in progress to secure a client and make a final decision on investment early next year.

The rapid AI development has resulted in a surge in the demand for electricity to power data centres. Chevron has held discussions with major tech companies such as OpenAI, Meta and Meta.

Investors will be able to learn more about the company's plans for improving its exploration when they meet with them later in New York City.

Bonner stated that Chevron would increase its annual expenditure on exploration, and use AI for faster data analysis. Exploration projects traditionally can take years to complete. Sheila Dang reported from Houston, and Nathan Crooks edited the story.

(source: Reuters)