Chevron plans $80B in dividends as shale production ramps up

Chevron plans as much as $80 billion in dividends and share buybacks over the next five years. $75 to $80 billion shareholder distribution capacity over five years. Company announced it has sanctioned the Anchor project in the U.S. Gulf of Mexico.

Company boosting distributions by 20% compared with the most recent pace of payouts as the U.S. oil giant ramps up production. Company announced that it has signed a conditional Share Sale Agreement with Puma Energy Asia Pacific B.V.

Disciplined capital allocation prioritizes high return, lower risk investments. Mike Wirth, who took over as chief executive officer little more than two years ago, promised shareholders a mix of cost-cutting. Company announced a contribution of $100,000 from the Chevron Global Community Fund to the American Red Cross to support relief efforts.

It measured production growth to offer attractive financial returns even as customers and policymakers demand lower-carbon fuels. Company Provides $2 billion in anticipated annual operating cost and capital synergies.

It return on capital employed exceeds 10% by 2024. It marks the industry’s first deepwater high-pressure development to achieve a final investment decision. Company acquire all shares and equity interests of Puma Energy (Australia) Holdings Pty Ltd for the amount of AU$425 million.

Production from the Permian in Texas and New Mexico will double over the next five years and eventually account for a third of its global output. The acquisition will provide Chevron with a stable market for production volumes from refining joint ventures in Asia.

Capital allocation decisions and lower price outlook expected to result in non-cash after tax charges in fourth quarter 2019. The targets, unveiled by Chevron at its investor meeting in New York on last Tuesday.

It illustrative of the high-wire balancing act facing Big Oil. Chevron has a winning investment proposition. Chevron, with operations all around California and 140 years of history in the state. The industry’s largest companies are being asked to reinvest in future production, reward shareholders.

At the same time, work through an energy transition that may spell the end of fossil fuel growth within a decade. This decision reinforces Chevron’s commitment to the deepwater asset class. It will build on Chevron’s strong history of partnership in Australia and our global experience in fuels.

For new projects in the Gulf of Mexico, it have reduced development costs by nearly a third. Company announced a 2020 organic capital and exploratory spending program of $20 billion. Chevron’s projected investor returns “look well supported by the balance sheet.

The company will also match any qualifying donations to wildfire relief efforts made by employees and retirees. The share repurchase annual target increases by 25 percent to $5 billion. Chevron said it will save $2 billion by cost cutting and margin improvements while holding annual capital spending to no more than 10% above current levels.

RBC analyst Biraj Borkhataria says in a statement “It looks more like evolution than revolution, and continues the prior mantra around lower for longer capex”.

At Anchor, it streamlined front-end engineering and design phase and are utilizing more industry standards. Returns on capital will increase to more than 10% by 2024, up a third from current levels.

The company also expects 9 percent compound annual growth in adjusted operating cash flow. Chevron’s returns have languished in recent years, far below where they stood a decade earlier. Exxon Mobil Corp. has seen a similar deterioration.

“This doesn’t relies on self-help to greater cost efficiency, continued capital discipline and effective portfolio management”, Wirth said.

The Permian will be a key driver of Chevron’s plan to improve performance, offering more than 20% profit for each dollar invested. The 2020 budget supports a robust portfolio of upstream and downstream investments.

Company announced that it has entered into a definitive agreement with Anadarko Petroleum Corporation. Production will flatten out at 1.2 million barrels a day by the mid-2020s with capital spending of about $4.5 billion a year.

The contribution follows the California Fire Foundation’s announcement last month of a four-year. The total enterprise value of the transaction is $50 billion. The Permian targets show faith in a basin in which many operators are struggling to generate cash after taking on bigs debts during the past decade.

The combination is expected to result in the doubling of adjusted free cash flow per share by 2024. This will be the third consecutive year with organic capital spending held flat at $20 billion. Chevron believes it’s unaffected by those challenges, with a superior land position inherited from its merger with Texaco Inc.

The Anchor Field is located in the Green Canyon area, approximately 140 miles (225 km) off the coast of Louisiana. Chevron’s disciplined approach to capital allocation and a downward revision in its longer-term commodity price outlook.

In 2001 and the financial firepower to out-muscle smaller rivals through troughs in oil and gas prices. Chevron (NYSE: CVX) is one of the world’s leading integrated energy companies. The acquisition of Anadarko will significantly enhance Chevron’s already advantaged Upstream portfolio.

With a strategy of emphasizing cash returned to investors over production growth, Chevron is following the path laid down in recent year. The company will reduce funding to various gas-related opportunities including Appalachia shale. This transaction will unlock significant value for shareholders.

It recognizes that the world doesn’t need ever-increasing amounts of oil and that shareholders need to be rewarded for owning fossil fuel producers. It remain focused on a returns-driven approach to capital allocation. The initial development of the project will require an investment of approximately $5.7 billion.

Chevron’s new target of shareholder distributions suggests a significant increase from what the American oil giant has been doing until recently. Company expect return on capital to exceed 10 percent by 2024 at flat $60 Brent nominal prices.

Chevron returned $13 billion in dividends and buybacks, equivalent to $65 billion if repeated over a five-year period. The revised oil price outlook resulted in an impairment at Big Foot. Combined. Chevron explores for, produces and transports crude oil and natural gas.

The new goal of $75 billion to $80 billion in returns is equivalent to about 45% of its current market value. This performance is supported by an unmatched balance sheet. These actions are estimated to result in non-cash.

Chief Financial Officer Pierre Breber says “If you’re looking for cash, Chevron is the place to be”.

The planned facility has a design capacity of 75,000 barrels of crude oil and 28 million cubic feet of natural gas per day. Chevron’s shares rose 0.3% at $96.86 at 10:11 a.m. in New York. Brent crude rose 1.8% to $52.81 a barrel. The strategic combination of Chevron and Anadarko will form a stronger.

Chevron has declined 20% this year, almost mirroring the fall in Brent. The total potentially recoverable oil-equivalent resources for Anchor are estimated. It showing that investors are not giving the oil giant much benefit for its refineries.

Chevron Corporation is one of the world’s leading integrated energy companies. Company believe the best use of capital is investing in most advantaged assets. The chemical operations that usually cushion the impact of low prices.

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