Chevron released a reinforced program to achieve higher returns for stakeholders and lower carbon operations; it pretends to more than doubling return on capital employed by 2025, as well as a 35% carbon intensity reduction by 2028; the company announced this Tuesday.
Firstly, the company announced the plan at its annual investor meeting. According to Michael Wirth, Chevron’s CEO, “the message is summarized in four words – higher returns, lower carbon.”
“We’re building on our track record of capital and cost discipline to deliver higher returns. And we’re also taking action to advance a lower carbon future.” He added.
The plan, as said above, is divided in two realms, the financial one, and the environmental one. For the financial part of it, the company intends to maintain a disciplined capital and cost program to deliver higher returns.
Specifically, Chevron reaffirmed its 2021-2025 capital and exploratory expenditures of $14 to $16 billion; it also doubled its initial estimate of earnings due to Noble synergies, to $600 million. This, according to the statement will contribute with a 10% decrease in operating expenses compared to 2019’s average.
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Presence of Chevron in Kazakhstan and the Permian Basin to play key role in strategy
Moreover, as we reported previously, Chevron acquired Noble Energy and Noble Midstream Partners. The transaction, all-stock, pretends to create synergies from which the company will leverage higher returns and operational cost savings.
Consequently, the combination of those synergies with a disciplined capital program will result in “a doubling of the company’s return on capital employed and 10% CAGR of free cash flow by 2025 at $50 Brent.” The company says in its statement.
Pierre Breber, Chevron’s CFO, said about the subject. “The path to increase return on capital employed is straightforward – invest in only the highest-return projects and operate cost efficiently. Capital discipline and cost efficiency always matter. We also have the portfolio and investments that position us to increase returns and grow free cash flow.”
Its growing operations in Kazakhstan and the Permian Basin will play a pivotal role in this plan.
On the other hand, on the lower carbon strategy, the company will increase its renewable energy investments; also, its carbon offsets strategy, and will invest more in lower carbon tech, such as hydrogen and carbon capture.
Finally, Chevron expects to “invest more than $3 billion in the coming years to advance our energy transition strategy.” Said Wirth.
