Chevron expects 600,000 bpd in Permian output by 2020

NEW YORK -- At its annual Security Analyst Meeting, Chevron Corporation announced expectations for significant cash flow growth, disciplined spending, and expanding production over the next five years.

“Chevron is in an exceptional position to deliver industry-leading value to shareholders,” said Michael Wirth, Chevron’s chairman and CEO. “Our advantaged portfolio is driving strong production growth with lower execution risk, higher cash flow and increased cash returns to shareholders.”

Disciplined capital program

The company outlined a ratable capital program and a returns-driven approach to capital allocation. “We’ve refocused our investment priorities,” said Wirth, “and expect 70% of this year’s spend to deliver cash flow within two years.” The Company reaffirmed a disciplined C&E program and established an annual target of $19 to $22 billion from 2021 to 2023.

Jay Johnson, executive V.P., upstream, explained the ratable investment will deliver steady growth. “We expect to deliver a three to four percent compound annual production growth rate through 2023,” he said. “Our strong resource base gives us the flexibility and choices that allow us to fund the projects we believe will yield the best returns.”

Significant growth in the Permian

Chevron’s outlook is supported by strong performance in the Permian basin, where the company has added almost 7 Bbbl of resource and doubled its portfolio value over the past two years. Permian unconventional net oil-equivalent production is now expected to reach 600,000 bpd by the end of 2020, and 900,000 bpd by the end of 2023.

The company’s unique position in the Permian is “characterized by long-held acreage, zero-to-low royalty on more than 80% of our land position, and minimal drilling commitments,” said Johnson. These attributes together with the deployment of new technologies are driving higher returns, stronger cash flows, and increased value.

Delivering on financial commitments

Chevron expects approximately $30 billion of cash generation at $60 Brent in 2019 to be used to fund the 6% annual dividend increase, a ratable and high-return capital program, and $4 billion of expected share repurchases.