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Chevron Meeting Takeaways: Goldman Sachs Analyst Highlights Expectations For Volume And FCF Inflection
CVXChevron(CVX) Benzinga·2025-03-05 19:40

Core Viewpoint - Chevron Corporation is focusing on operational updates, growth prospects, cost reduction initiatives, and aims to generate approximately 10billioninadditionalfreecashflowby2026[1]Group1:OperationalUpdates−InKazakhstan,ChevronplanstorampupTengiztofullproductionofapproximately1millionbarrelsofoilequivalentperday(MBOE/d)withinthreemonths,withkeymilestonesincludingfirstoilattheFutureGrowthProject(FGP)whichwilladd260,000barrelsperday(bpd)tocapacity[2]−TheTengizprojectisexpectedtogeneratearound10 billion in additional free cash flow by 2026 [1] Group 1: Operational Updates - In Kazakhstan, Chevron plans to ramp up Tengiz to full production of approximately 1 million barrels of oil equivalent per day (MBOE/d) within three months, with key milestones including first oil at the Future Growth Project (FGP) which will add 260,000 barrels per day (bpd) to capacity [2] - The Tengiz project is expected to generate around 5 billion to 6billioninfreecashflowin2025/2026ataBrentpriceof6 billion in free cash flow in 2025/2026 at a Brent price of 70 per barrel, including dividends and loan repayments [2] Group 2: Growth Prospects - Chevron highlighted strong performance in the Permian Basin and reaffirmed its target of approximately 1 MBOE/d production in 2025, with an expected compound annual growth rate (CAGR) of about 6% through 2026 [3] - The company anticipates approximately 2billioninfreecashflowgrowthfromthePermianby2026,withlong−termproductionexpectedtoremainaround1MBOE/d[3]Group3:CostReductionInitiatives−Chevronisfocusedoncostdiscipline,aimingforstructuralsavingsof2 billion in free cash flow growth from the Permian by 2026, with long-term production expected to remain around 1 MBOE/d [3] Group 3: Cost Reduction Initiatives - Chevron is focused on cost discipline, aiming for structural savings of 2 billion to 3billionbytheendof2026,withapproximately3 billion by the end of 2026, with approximately 1.5 billion to $2 billion targeted by the end of 2025 [4] Group 4: Low-Carbon Initiatives - Investor discussions included Chevron's collaboration with Engine No. 1 and GE Vernova to develop low-carbon power solutions, targeting up to four gigawatts for U.S. data centers, with seven GE turbines scheduled for delivery in late 2026 to 2027 [5] Group 5: Financial Outlook - The analyst reaffirms a Buy rating on Chevron, projecting a volume and free cash flow inflection in 2025/2026 driven by strategic projects including TCO, Permian, and the Gulf of America [6] - The company is expected to have an estimated capital returns yield of around 12% in 2026, focusing on shareholder returns [6]