Chevron expects its 2018 net production to grow by between 4 percent and 7 percent at oil prices at $60 a barrel, the U.S. oil supermajor said in its annual security analyst meeting on Tuesday.
Last year, Chevron’s production was 2.73 million barrels of oil equivalent per day (boed), 5-percent growth over 2016, and this year and until 2020, Chevron believes it is “well-positioned to sustain this momentum.”
Other highlights from Chevron’s strategy through 2020 include boosting production from the Permian, keeping the capital discipline, and expectations that it would resume its share buyback program.
For this year, Chevron’s capital and exploratory budget is $18.3 billion, with 75 percent of the spending expected to deliver cash flow within 2 years. The annual capex guidance for 2019 and 2020 is between $18 billion and $20 billion.
This year, Chevron expects cash generation at around $14 billion, with cash flow breakeven at $50 oil price without asset sales.
“We plan to further lower our cost structure, get more value from our existing assets and continue to high-grade our portfolio. We believe execution of these plans will support our primary commitment to shareholders, which is a sustained and growing dividend over time. As we generate surplus cash, we would expect to be in a position to resume our share repurchase program,” Chevron’s chairman and CEO Michael K. Wirth said in the company statement.
Chevron will also continue to review its portfolio and invest in high-margin, high-return operations, and seek scale and efficiency. The oil major will divest assets that are non-strategic fit, can’t compete for capital, and receive good value. Chevron targets to generate proceeds from asset sales of between $5 billion and $10 billion in 2018-2020.
In the Permian, Chevron has increased its resources by 20 percent to more than 11 billion barrels, and expects its Permian Basin unconventional production to reach around 500,000 bpd by end of 2020 and 650,000 bpd by the end of 2022.
Earlier this year, the other U.S. oil supermajor, Exxon, said that it plans to triple its total daily production in the Permian to more than 600,000 oil-equivalent barrels by 2025.
By Tsvetana Paraskova for Oilprice.com