March 3, 2020 - 6:45 AM EST
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Chevron Outlines Plan to Deliver Leading Shareholder Returns

NEW YORK

  • $75 to $80 billion shareholder distribution capacity over five years
  • Adjusted free cash flow per share doubles by 2024
  • Return on capital employed exceeds 10% by 2024

At its annual Security Analyst Meeting today, Chevron Corporation (NYSE: CVX) announced expectations to deliver leading shareholder returns through disciplined capital spending, improved cost efficiency, and continued cash flow growth over the next five years.

“Chevron has a winning investment proposition,” said Michael Wirth, Chevron’s chairman and CEO. “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.”

Robust Cash Generation & Improved Returns on Capital

Higher returns are primarily driven by the company’s new $2 billion target for cost and margin improvements as well as short cycle, capital efficient investments. The company also expects 9 percent compound annual growth in adjusted operating cash flow per share through 2024 while holding annual capital spending in a narrow range of $19 to $22 billion. The combination is expected to result in the doubling of adjusted free cash flow per share by 2024.

“We remain focused on a returns-driven approach to capital allocation, investing in lower-risk projects that should drive solid earnings and cash flow growth. As a result, we expect return on capital to exceed 10 percent by 2024 at flat $60 Brent nominal prices, an improvement of over 300 basis points,” said Pierre Breber, Chevron’s chief financial officer. “This performance is supported by an unmatched balance sheet and the lowest dividend breakeven among our peers.”

More Cash Returned to Shareholders

Chevron remains committed to delivering on its financial priorities and returning more cash to its shareholders, as demonstrated by an 8 percent dividend increase in 2020 and $5 billion of expected annual share repurchases. Combined, the company has a total shareholder yield greater than 7 percent.

“Execution of our strategy is positioning Chevron to return more cash to shareholders, today and into the future,” Wirth said. “Even with price volatility, we have the capability to deliver leading dividend growth and sustain our buyback program well into the future.”

Disciplined Investments and Production Growth

Chevron continues to execute its lower-risk and disciplined capital program, highlighted by its world-class Permian Basin position, the major expansion in Kazakhstan, and an attractive queue of deepwater opportunities in the Gulf of Mexico. The company expects compound annual production growth greater than 3 percent from 2019 to 2024, excluding any future unannounced asset sales.

“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,” said Jay Johnson, executive vice president, Upstream. “Our experience and technology edge in the deepwater should enable continued development in the Gulf of Mexico, Brazil, and West Africa, and we have long-lived, low-decline assets in Australia and Kazakhstan. On top of this foundation, we have additional organic opportunities already in our portfolio that could attract future capital and deliver upside.”

Approach to Energy Transition

The company continues to invest in the future of energy to meet the world’s need for affordable, reliable and ever-cleaner energy. This includes lowering its carbon intensity cost efficiently, increasing renewables in support of its business, and investing in potential breakthrough technologies such as alternative fueling infrastructure and carbon capture.

“Our approach delivers greenhouse gas reductions in the short term while making investments in potential future breakthrough technologies for the long term,” Wirth added. “Chevron has the scale, capability and balance sheet strength to advance the innovations that will play a significant role in the future of energy.”

Non-GAAP Measures

For purposes of this news release, expected growth in adjusted operating cash flow refers to growth in cash flow from operations (CFFO) less working capital and special items divided by average diluted shares outstanding and assumes $5 billion per year in share repurchases.

Expected growth in adjusted free cash flow (FCF) refers to growth in CFFO less cash capital expenditures, working capital and special items divided by average diluted shares outstanding and assumes $5 billion per year in share repurchases.  FCF represents the cash available to creditors and investors after investing in the business.

For additional information regarding expected future performance, including adjusted CFFO and adjusted FCF, please refer to the presentations and full transcript of the meeting available on the Investor Relations website at www.chevron.com.

Chevron Corporation is one of the world's leading integrated energy companies. Through its subsidiaries that conduct business worldwide, the company is involved in virtually every facet of the energy industry. Chevron explores for, produces and transports crude oil and natural gas; refines, markets and distributes transportation fuels and lubricants; manufactures and sells petrochemicals and additives; generates power; and develops and deploys technologies that enhance business value in every aspect of the company's operations. Chevron is based in San Ramon, Calif. More information about Chevron is available at www.chevron.com.

NOTICE

As used in this news release, the term “Chevron” and such terms as “the company,” “the corporation,” “our,” “we” and “us” may refer to Chevron Corporation, one or more of its consolidated subsidiaries, or to all of them taken as a whole. All of these terms are used for convenience only and are not intended as a precise description of any of the separate companies, each of which manages its own affairs.

CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This news release contains forward-looking statements relating to Chevron’s operations that are based on management’s current expectations, estimates and projections about the petroleum, chemicals and other energy-related industries. Words or phrases such as “anticipates,” “expects,” “intends,” “plans,” “targets,” “forecasts,” “projects,” “believes,” “seeks,” “schedules,” “estimates,” “positions,” “pursues,” “drives,” “may,” “could,” “should,” “will,” “budgets,” “outlook,” “trends,” “guidance,” “focus,” “on schedule,” “on track,” “is slated,” “goals,” “objectives,” “strategies,” “opportunities,” “poised,” “potential,” and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, many of which are beyond the company’s control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this news release. Unless legally required, Chevron undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Among the important factors that could cause actual results to differ materially from those projected in the forward-looking statements are: changing crude oil and natural gas prices; changing refining, marketing and chemicals margins; the company's ability to realize anticipated cost savings and efficiencies associated with enterprise transformation initiatives; actions of competitors or regulators; timing of exploration expenses; timing of crude oil liftings; the competitiveness of alternate-energy sources or product substitutes; technological developments; the results of operations and financial condition of the company's suppliers, vendors, partners and equity affiliates, particularly during extended periods of low prices for crude oil and natural gas; the inability or failure of the company’s joint-venture partners to fund their share of operations and development activities; the potential failure to achieve expected net production from existing and future crude oil and natural gas development projects; potential delays in the development, construction or start-up of planned projects; the potential disruption or interruption of the company’s operations due to war, accidents, political events, civil unrest, severe weather, cyber threats, terrorist acts, and public health crises, such as pandemics and epidemics; crude oil production quotas or other actions that might be imposed by the Organization of Petroleum Exporting Countries and other producing countries, or other natural or human causes beyond the company’s control; changing economic, regulatory and political environments in the various countries in which the company operates; general domestic and international economic and political conditions; the potential liability for remedial actions or assessments under existing or future environmental regulations and litigation; significant operational, investment or product changes required by existing or future environmental statutes and regulations, including international agreements and national or regional legislation and regulatory measures to limit or reduce greenhouse gas emissions; the potential liability resulting from pending or future litigation; the company’s future acquisitions or dispositions of assets or shares or the delay or failure of such transactions to close based on required closing conditions; the potential for gains and losses from asset dispositions or impairments; government-mandated sales, divestitures, recapitalizations, industry-specific taxes, tariffs, sanctions, changes in fiscal terms or restrictions on scope of company operations; foreign currency movements compared with the U.S. dollar; material reductions in corporate liquidity and access to debt markets; receipt of required Board authorizations to effect future dividend and share repurchases; the effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies; the company's ability to identify and mitigate the risks and hazards inherent in operating in the global energy industry; and the factors set forth under the heading “Risk Factors” on pages 18 through 21 of the company’s 2019 Annual Report on Form 10-K and in subsequent filings with the U.S. Securities and Exchange Commission. Other unpredictable or unknown factors not discussed in this presentation could also have material adverse effects on forward-looking statements.

Braden Reddall -- +1 925-842-2209


Source: Business Wire (March 3, 2020 - 6:45 AM EST)

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Recent Company Earnings:


March 3, 2020

At its annual Security Analyst Meeting today, Chevron Corporation (NYSE: CVX) announced expectations to deliver leading shareholder returns through disciplined capital spending, improved cost efficiency, and continued cash flow growth over the next five years.

February 24, 2020

Superior Drilling Products, Inc. (NYSE American: SDPI) (“SDP” or the “Company”), a designer and manufacturer of drilling tool technologies, today announced unaudited preliminary revenue for the year ended December 31, 2019, was $19.0 million, up 4% from the prior year. Fourth quarter 2019 preliminary revenue included approximately $600 thousand from the rental of the Company’s well bore conditioning tool, the Drill-N-Ream® (DNR) in the Middle East, or almost half of SDP’s total Middle East revenue for the year. For the year, international revenue nearly quadrupled to $1.3 million compared with $360 thousand in 2018. At the end of 2019, SDP had $1.2 million in cash. Preliminary results are subject to change pending review by the Company’s independent accountants.

February 20, 2020

Houston Chronicle


Houston oilfield service company Halliburton plans to pay down its long-term debt by issuing $1 billion in lower-interest notes.

Halliburton to pay down debt by issuing $1 billion of lower-interest notes- oil and gas 360

Source: Houston Chronicle

Halliburton on Wednesday said it plans to issue a type of debt known as senior notes. Due in March 2030, the notes will pay 2.92 percent interest.

The company said it will use proceeds from the sales to buy back previously issued senior notes and reduce other forms of debt.

Halliburton closed 2019 with about $10.3 billion of debt, almost one-third less than the $15.4 billion in debt it had at the end of 2015, according to a Securities and Exchange Commission filing.

With the price of crude hovering just above $50 per barrel, most oil companies are reducing drilling and fracking activity, resulting in recent losses for oilfield service companies. Halliburton lost $1.1 billion in 2019.

Shell Midstream Partners, L.P. (NYSE: SHLX) reported net income attributable to the Partnership of $140 million for the fourth quarter of 2019, which equated to $0.37 per common limited partner unit. Shell Midstream Partners also generated adjusted earnings before interest, income taxes, depreciation and amortization attributable to the Partnership of $187 million.

February 19, 2020

HOUSTON, Feb. 19, 2020 (GLOBE NEWSWIRE) — Hi-Crush Inc. (NYSE: HCR) (the “Company”), a fully-integrated provider of proppant logistics solutions, today reported fourth quarter and full year 2019 results. Revenues during the fourth quarter of 2019 totaled $125.5 million compared to $173.0 million during the third quarter of 2019.

DENVERFeb. 19, 2020 /PRNewswire/ —

  • Fourth quarter oil production averaged 92.0 MBbls per day
    • Full year oil production averaged 86.2 MBbls per day
  • 2019 capital investment (including midstream) totaled $1.32 billion; below guidance range
    • Lower D&C costs drove the beat
  • Generated $1.34 billion of net cash from operating activities
    • $141 million of free cash flow1 in 2019; $59 million after dividend

February 14, 2020

Enbridge Files 2019 Year End Disclosure Documents

February 13, 2020

Houston Chronicle


Houston exploration and production company Marathon Oil has cut its drilling budget by about 10 percent amid an ongoing shale slump that caused revenue and profits to decline in 2019.

Marathon Oil cuts drilling budget amid 56 percent drop in profit- oil and gas 360

Source: Houston Chronicle

In a Wednesday afternoon statement, Marathon said the company is cutting capital expenditures by 10 percent, to $2.4 billion from $2.6 billion in 2019.

The company plans to spend $2.2 billion of its capital expenditure budget on drilling, hydraulic fracturing and other activities in the field while the remain $200 million will go to secure new oil leases and exploratory work looking for new geological formations with oil and natural gas.

Marathon remains in the black, but like other companies in the exploration and production sector, more than a year of crude oil prices in the $50 range is taking its toll on profit and drilling activity.

Active in the Eagle Ford Shale, Permian Basin, Oklahoma and Bakken Shale, Marathon reported a $20 million loss during the fourth quarter of 2019 compared with a $165 million profit a year earlier and revenue fell to $1.2 billion from $1.3 billion.

For the year, the company reported a $480 million profit, a 56 percent drop from the $1.1 billion profit in 2018; revenue of $5.2 billion was 21 percent off the $6.6 billion in 2018.

“We’ll continue to be guided by our unwavering commitment to capital discipline and sustainability,” Marathon Oil CEO Lee Tillman said in a statement.

 

Precision Drilling Corporation Announces 2019 Fourth Quarter and Year End Unaudited Financial Results

February 7, 2020

Houston Chronicle


Houston oilfield service company National Oilwell Varco finished up a year of losses $6.1 billion in the red.

NOV finishes year of losses $6.1 billion in the red- oil and gas 360

Source: Houston Chronicle

In a statement released on Thursday evening, the company reported closing 2019 with a $6.1 billion loss, a dramatic drop from the $31 million end-of-year loss in 2018. The company’s annual revenue remained flat at $8.5 billion.

Most of the company’s end-of-year loss came from writing down the value of $5.4 billion of assets during the second quarter. Crude oil prices stuck in the $50 per barrel range for most of past year have dramatically cut demand for drilling and hydraulic fracturing services in the United States. The shale slump has created eye-popping losses for oilfield services companies, which have written down billions of dollars of assets in response.

“The fourth quarter saw continued improvements in international and offshore markets, partially offset by another sequential decline in spending by our customers in North America,” National Oilwell Varco CEO Clay Williams said in a statement.

Looking at the company’s fourth quarter performance, NOV posted a $385 million loss, which was a dramatic swing from the $15 million profit during the fourth quarter of 2018.

The company’s fourth quarter revenue also slipped by 5 percent year-over-year. NOV reported making $2.3 billion during the fourth quarter, compared to $2.4 billion during the fourth quarter one year earlier.

With historical roots going back to 1862, NOV is headquartered in Houston and has more than 35,000 employees in 65 nations.

The company has not made an annual profit since 2014.

 

February 6, 2020

Reuters


ABERDEEN, Scotland – Total (TOTF.PA) beat forecasts on Thursday by keeping net adjusted fourth-quarter profit steady at $3.2 billion despite low oil prices and fulfilled a pledge to boost dividends, lifting the French energy firm’s shares.

Total beats quarterly forecasts despite low oil price, raises payout- oil and gas 360

Source: Reuters

The stock rose about 3% before easing off its highs as the company bucked a trend in the industry which has seen profits tumble in the last three months of 2019. Analysts had expected Total’s net profit to slip to $2.7 billion.

“This performance is better than that of our rivals in terms of resisting low oil prices,” CEO Patrick Pouyanne told journalists, adding Total was rewarding investors with a 6% increase in the final dividend for 2019 to 0.68 euros per share.

“Taking into account the strong visibility on cash flow, the group will continue to increase the dividend with the guidance of 5% to 6% per year,” the company said in its statement.

Total bought back $1.75 billion in shares in 2019 and plans to buy back $2 billion more in 2020.

Pouyanne said the group had reported solid results including debt-adjusted cash flow (DACF) of $7.4 billion, up more than 20% from a year earlier.

“While some peers buckled last week to a synchronized slowdown in their commodity prices and margins, Total has bucked that trend with flat year-on-year net income,” Bernstein analysts wrote, adding that net income and net operating income were both ahead of forecasts.

The analysts, which rate the stock “outperform”, said liquefied natural gas (LNG) margins “also beat our expectations as the company proved immune to low spot gas prices despite market concerns”.

LNG prices have been under pressure as new projects have kept the market well supplied, while oil prices LCOc1 have tumbled to around $55 per barrel from last year’s peak in April of almost $75.

Rivals have seen fourth-quarter profits slide on lower prices. BP (BP.L) reported a 26% drop on Tuesday while Royal Dutch Shell (RDSa.L) last month said its profits had halved.

(Graphic: Majors cashflow Total, here)

Reuters Graphic

LNG OUTPUT

Total’s oil and gas production grew by 9% in 2019 thanks to project start-ups and ramp-ups, while its LNG business doubled, boosting cash flow.

“One of the reasons our results resisted the low oil environment was because of the strong LNG output which grew 50%,” Pouyanne said.

He said exceptional production growth was unlikely to continue in the years to come and output growth for 2020 was seen at 2% to 4%, a more typical level in the industry.

The chief executive said Total was expanding in the low carbon energy business and was on track to meet its goal of producing 25 gigawatts (GW) of renewable electricity by 2025, helped by solar projects in Qatar and India.

Total, which kept its capital expenditure target steady for 2020 at $18 billion, said it was on track to achieve its target of $5 billion in divestments during 2019 and 2020.

Total said it had sold its 27.5% interest in Fosmax LNG, which operates France’s Fos Cavaou LNG terminal, to Engie (ENGIE.PA) unit Elengy for about $260 million.

Total is on track to achieve its divestment target with transactions worth $3 billion so far, Jefferies analysts said.

(Graphic: Total Results, here)

Reuters Graphic

Houston Chronicle


Black Stone Minerals said it will cut its quarterly payouts to investors by almost 20 percent because of falling oil and gas prices.

Black Stone Minerals cuts investor payouts by almost 20%- oil and gas 360

Source: Houston Chronicle

In another sign of the weakening energy sector, the Houston oil and gas royalties firm will reduce its distributions to 30 cents per unit from 37 cents. This is the first time Black Stone has reduced its payout since going public in 2015.

Even during the lean years of the last oil bust in 2015 and 2016, Black Stone steadily hiked investor payments from an initial 16.2 cents per unit in 2015.

“We are taking a proactive approach to strengthen our balance sheet and enhance our financial flexibility with the expectation that 2020 may be a challenging year in terms of commodity prices and overall drilling activity,” said Black Stone CEO Thomas Carter Jr.

“Given the current environment, the board believes that reducing the distribution benefits unitholders by providing additional cash flow for, first, the repayment of debt, and for other such uses as unit repurchases and acquisitions.,” Carter added.

February 4, 2020

CNBC


Energy giant BP reported better-than-expected full-year net profit on Tuesday, outperforming analyst expectations despite lower oil and gas prices.

BP full-year net profit falls 21% on weak oil and gas prices- oil and gas 360

Source: Reuters

The U.K.-based oil and gas company posted full-year underlying replacement cost profit, used as a proxy for net profit, of $10 billion in 2019. That compared with $12.7 billion full-year net profit in 2018, reflecting a year-on-year fall of 21%.

Analysts had expected full-year net profit to come in at $9.7 billion in 2019, according to data from Refinitiv.

Shares of BP were up more than 4%.

“BP is performing well, with safe and reliable operations, continued strategic progress and strong cash delivery,” Bob Dudley, CEO of BP, said in a statement.

“After almost ten years, this is now my last quarter as CEO. In that time, we have achieved a huge amount together and I am proud to be handing over a safer and stronger BP to Bernard and his team.”

“I am confident that under their leadership, BP will continue to successfully navigate the rapidly-changing energy landscape,” Dudley said.

Bernard Looney, who has run BP’s upstream business since April 2016 and has been a member of the firm’s executive management team since November 2010, is now set to take the reins from the outgoing chief executive.

In October, Dudley announced he would step down as CEO on Feb. 4., having held the position for almost a decade. The 64-year-old plans to retire on March 31, thus bringing an end to his 40-year career with BP.

Here are the key highlights:

  • Underlying replacement cost profit for the fourth quarter and full-year 2019 was $2.6 billion and $10.0 billion respectively, compared to $3.5 billion and $12.7 billion for the same periods a year earlier.
  • Gulf of Mexico oil spill payments for the year totaled $2.4 billion on a post-tax basis, and are expected to be less than $1 billion in 2020.
  • A dividend of 10.5 cents per share was announced for the quarter, an increase of 2.4% on a year earlier.

The energy giant’s full-year results follow disappointing earnings from oil and gas companies on both sides of the Atlantic.

Anglo-Dutch energy giant Royal Dutch Shell reported a sharp fall in full-year net profit late last week, while U.S. rivals Chevron and Exxon Mobil both missed analyst expectations on Friday.

France’s Total is scheduled to report its latest quarterly earnings on Feb. 6.

All roads lead to OPEC decision

International benchmark Brent crude traded at $54.74 Tuesday lunchtime, up more than 0.5%, while U.S. West Texas Intermediate (WTI) stood at $50.75, around 1.2% higher.

Both crude benchmarks have each fallen around 20% since climbing to a peak in early January, dragged lower by concern over demand in China after the coronavirus outbreak.

Brian Gilvary, chief financial officer at BP, told CNBC’s “Squawk Box Europe” on Tuesday that the coronavirus outbreak could wipe out as much as 300,000 to 500,000 barrels per day (bpd) of oil demand in 2020.

The International Energy Agency (IEA) has previously said it expects oil demand to grow by 1.2 million bpd this year, so a reduction of up to 500,000 bpd would leave demand growth “healthy” at 700,000 to 800,000 bpd, Gilvary said.

“I think, in terms of price direction, all roads will then lead to what OPEC will do in terms of trying to rebalance the system to get back to something around $60 to $65 a barrel,” he added.

OPEC and its allies are considering cutting their oil output by a further 500,000 bpd this year, two OPEC sources and a third industry source familiar with discussions told Reuters on Monday.

A ministerial meeting currently scheduled for early March could be brought forward to mid-February, one of the OPEC sources said, with February 14-15 touted as possible dates.

Houston Chronicle


ConocoPhillips’ fourth-quarter profit declined by more than 60 percent, to $720 million from $1.9 billion in the same period last year, amid weaker oil prices and production outputs.

ConocoPhillips' fourth-quarter profit plunges by 60%-oil and gas 360

Source: Houston Chronicle

Revenue during the quarter dropped by more than 20 percent to $8.1 billion.

For the full year, net earnings jumped 15 percent to $7.2 billion compared with $6.3 billion in 2018.

The Houston oil and gas producer still won over many on Wall Street late last year by hiking dividend payments to shareholders and with the release of a 10-year outlook that would rein in spending throughout the new decade.

“Strong 2019 performance capped off a highly successful three-year period in which we transformed our business model and significantly improved our underlying performance drivers across the company,” said Ryan Lance, chairman and chief executive officer. “We’ve positioned ConocoPhillips to deliver sustained value through price cycles due to our strong balance sheet, focus on free cash flow generation, compelling returns of and returns on capital and our commitment to environmental, social and governance leadership.”

Essentially, ConocoPhillips is focused on bringing in stronger profits and paying out more to investors while operating with flatter spending and smaller overall scale.

The company’s production output is expected to dip a little in 2020 because of some recent asset sales.

Last year, ConocoPhillips’ oil and gas production volumes grew by 5 percent despite a small decline in the fourth quarter.

The company’s shale production jumped by 22 percent last year. Shale volumes account for 30 percent of the company’s global production, led by South Texas’ Eagle Ford Shale. ConocoPhillips’ rising outputs in West Texas’ Permian Basin are on track to soon surpass its volumes in North Dakota’s Bakken shale.

Still, ConocoPhillips’ Asian, Australian, North Sea and Alaskan business units are more profitable than its U.S. shale output.

The company’s 2020 capital spending budget is projected to be $6.5 billion to $6.7 billion, on par with the $6.6 billion in 2019. However, that 2019 capital spending budget increased throughout the year from an initial budget of $6.1 billion, a revised midyear budget at $6.3 billion, and final spending for the year of $6.6 billion.

 


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