By slashing expenses by "a couple billion dollars", U.S. oil major Chevron (NYSE: CVX.N) is aiming to increase its free cash flow by US$6 billion to US$8 billion by 2026. Chevron reported US$19.78 billion in free cash flow for 2023, US$22.8 billion over the first nine months of 2024.
Michael Wirth CEO of the second largest oil producer expects the start of new or expanded oil production projects in Kazakhstan, U.S. shale and the offshore U.S. Gulf of Mexico to add materially to next year’s results.
Wirth expects oil production in the Gulf of Mexico to grow to 300,000 barrels per day by 2026, up from 200,000 last year, as Kazakhstan-based production climbed to 270,000 later in the year.
August 2024 saw Chevron produce its first oil from a pioneering U.S. Gulf of Mexico deepwater field under extreme pressures. While the project is projected to reach peak production of 75,000 barrels of oil per day, Chevron also has two other offshore projects to follow.
Turning his attention to gas at a Goldman Sachs Energy, CleanTech & Utilities Conference in Miami, Wirth said oversupply could hit in the latter half of the decade but that increasing power demand would likely need to be met before nuclear plants came online.
Wirth believes the U.S. could see a build-out of natural gas power generation plants to support energy demand from the growing number of data centres for artificial intelligence, which will likely come before the growth of nuclear energy.
"Nuclear is probably a decade away from most of the people I talk to that are working on those technologies ... so the good news is America is blessed with an abundance of natural gas," Wirth said.
Meanwhile, Wirth also provided an update on Chevron’s US$53 billion takeover of Hess Corp which he expects to be closed later this year, after being delayed by its Guyana oil production joint venture partners Exxon Mobil and CNOOC.
"Chevron is prepared for a "prompt close" later this year of its US$53 billion deal to acquire oil producer Hess Corp (HES.N)", Wirth said.
While the merger had been approved by shareholders and U.S. regulators it stalled subject to a contract arbitration challenge by Exxon Mobil (XOM.N).
"We continue to be very confident in Hess' position in the arbitration and we feel like they clearly have the right side of this argument," Wirth said.
Exxon’s claim of right-of-first-refusal to Hess’ 30% stake in Guyana’s Stabroek block is “baseless” and “without merit,” CEO John Hess noted at the Goldman Sachs conference.
“We think it’s very clear that the words on paper in English law that there’s no right or refusal to be exercised… we’re very confident that the merger is going to go through.”
The arbitration panel, which is taking place under rules designed by the International Chamber of Commerce, is due to decide on the case in the third quarter.