Chevron cuts capex, raises efficiency goals after Hess merger

HOUSTON, Texas: Chevron announced on November 12 that it aims to grow free cash flow by more than 10 percent annually through 2030 while expanding oil and gas production and cutting costs and capital spending. The updated guidance, unveiled at the company's investor day, marks the latest step in Chevron's push to operate more efficiently after a restructuring and layoffs earlier this year. Chevron completed its US$55 billion acquisition of Hess in July, a year later than planned, which had delayed its long-term outlook. Its shares are up 7.8 percent this year, trailing rivals Exxon Mobil and Shell. "Our advantaged assets, strong balance sheet, and disciplined capital program provide the foundation to thrive in any price environment," said Chief Financial Officer Eimear Bonner. Assuming Brent crude prices average $70 a barrel, Chevron expects both free cash flow and earnings per share to grow by more than 10 percent annually through 2030. Oil and gas output is projected to rise two percent to three percent per year from its current 4.1 million barrels of oil equivalent per day. Chevron lowered its planned annual capital spending to $18 to $21 billion, down from $19 to $22 billion, and raised its cost-cutting target to $3 to $4 billion by the end of next year, $1 billion higher than before. Bonner said upstream divestments and business simplification will yield $2 billion in savings by the end of this year, with another $1 billion expected from technology that allows remote monitoring of operations. "We're confident in increasing the range because we're already halfway there with the work that's underway," she said. Chevron also said it can fund both capital spending and dividends through 2030 even if Brent crude falls to around $50 a barrel. The company's first project to power an AI data center using natural gas will be built in West Texas and is targeted to begin operations by 2027. Chevron is in talks with potential customers, including tech companies such as OpenAI and Meta, and expects a final investment decision early next year. Chevron will also boost annual exploration spending and use AI to speed up data analysis, as exploration projects often take years to complete.