Chevron bosses today told investors the industry giant would be targeting “short-cycle, higher return” projects in a bid to strengthen its financial position.
The comments came as Chevron confirmed its capital budget for 2017-2018 would be between $17million and $22million per year. The figures are a steep decrease from 2014’s $40billion spend. A 25% reduction in its upstream staff was also part of the portfolio re-shuffle, according to today’s presentation. December’s 140 North Sea job losses are thought to be included in that top-line figure.
Chief executive John Watson said: “Industry conditions are tough right now, with low oil and natural gas prices. We believe markets will improve, and we’ll be well positioned when they do,” Watson continued. “We have an excellent upstream and downstream portfolio, and we are driving operating and administrative efficiencies across the company.”
Jay Johnson, executive vice president of upstream, added: “We’re focused on safe, reliable operations and effective project start-ups and ramp-ups. At Gorgon, we’re producing LNG and the first cargo is expected to ship next week. With an advantaged position in the Permian and a deep portfolio of operating assets, we’re transitioning our spending to more short-cycle, higher-return activity that utilizes existing infrastructure. We have a portfolio of assets that should allow production growth through the end of the decade, even at moderate prices.”
The operator’s drive to churn out long-standing projects was also boosting its cash flow, according to Watson.
“We’re completing major projects that have been under construction for several years. This enables us to grow production and reduce spending at the same time, which should improve our net cash flow significantly,” he said.
Earlier today, Chevron confirmed it had successfully started production from its $54billion liquefied natural gas (LNG) and condensate Gorgon Project.
The scheme, which is located on Barrow Island off the northwest coast of Western Australia, is the country’s largest resource development.
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