This is from Reuters. JW interview from Houston. Our brave CEO has a desire to put Permian assets in the ranks of Chevron's biggest ventures. This is in stark change from just 5 years ago when Chevron executives rarely mentioned the shale basin. With low oil prices, the company is now spending more than it makes to cover its prized dividend and find new reserves. He (JW) says that multi-billion-dollar projects will be gone for the next few years. To survive and grow, Chevron is turning to acreage it has always controlled and is largely free of royalties to landowners. JW expects that production will grow eightfold to more than 700k bod within a decade. JW bristles at critics who say the company is moving too slowly in the Permian. He says we're (Chevron) are focused on growing value and growing the dividend over time. JW stated that protecting the $1.08 quarterly payout is his top priority. The Permian will be the second largest area for spending behind the Tenghiz project, which is not expected to come online until the next decade. (Sorry for the long post.)
25 replies (most recent on top)
Megaprojects ramping up....LNG coming onstream? More like megaprojects ramping off a cliff. Ramping off a piece of plywood sitting on a cinder block. Gorgon is like paying $1MM for three milk cows and getting $3 per gallon for the milk per day (each cow produces a couple gallons a day). It will only take 152 years to pay for the cows....but they are coming onstream with milk and ramping up production. Hearing folks praise these flops is like the blind man telling the deaf woman what he saw.
Keep drinking the JW and his ship of fools koolaid so sad.
That's your opinion, 2nis. Here's mine: The next increase in the dividend will increase your chances of getting laid off. Double those chances if you are PSG23 or higher and your age is over 50. That's Chevron math these days.
The bitterness from the loser shown the door - get a grip. Too bad it took so long for you to be given the boot. If you were any good, you'd already have a job, with no time to whine and moan on this site - you'd be getting on with your career. But you aren't any good - mediocre at best - a seat warmer. Boo hoo!
Reality is CVX leads the group in metrics that matter to those that matter - the investor class - it's outperformed the peer group for decades (just go run a stock comparison and see).
Yes, Deepwater is done for now and LNG was fubar - but high energy prices change that. Permian is meat and potatoes, as is TCO. Long-term assets that deliver great returns, especially at higher prices.
The dividend is sustainable now that the megaprojects are coming onstream. The major long-term costs are at TCO when production is set to start in 2022. But in the meantime, they've got LNG ramping up. Then comes Permian. Then comes TCO. Every two years they are adding meaningful volume and cash flow, while capex is staying steady. Roll in some expected oil price rise and the handwringing will be a thing of the past. As JW and C-suite always say, the dividend is top priority (and I suspect their compensation is highly tied to maintaining and growing it), so expect it to continue to rise. Raising the divvy gets easier as the company grows - adding a penny a year is less incremental problem the bigger the divvy gets - and still keeps the 20+ year string of ever-growing divvies alive.
Who said anything about today's money?
2xtv: It sounds good, but terribly oversimplified. To begin earning $40k+ in dividends (per year) starting with 10,000 shares would require you to risk $1,088,500 of hard earned cash today. I understand your reasoning that by reinvesting the dividends, it grows year after year. But why risk $1MM with Chevron? There are other good dividend paying stocks out their that pay the same yield or more, in companies that are better managed, more stable, and which the underlying stock tends to grow steadily through the years. Ask yourself if you'd seriously invest $1MM in Chevron today at $108.50 per share and think over the years it will go up steadily. If it comes down to $100, you'd be taking a soaking despite the dividends. Stay away from that plan. Diversify your portfolio instead.
How about having 10,000 shares and earning $40,000 a year of income? Then 10400 shares earning $41,600 that year. Then 10840 shares earning $43,360 the next and so on. Constant raise for how many years?!
This is an overly simplification of the math, but doesn't that sound like a job that is worthwhile for your dollars?
What is this pathological obsession with the dividend? Yeah, it's cool with the investor class to be a dividend aristocrat and strut around with that status, but at what cost? Gorgon and Wheatstone are down 2 trains from an original 7 to just 5. That is a 29% reduction of the planned deliverable product because there is not enough money to complete them. What about Bigfoot fix and deployment? There is not enough money for that. What about all the employees that have been laid off and will continue to be laid off? Not enough money to pay them all. JW just does not want to be remembered as the one who cut or stopped raising the dividend. Everything else is ok to be remembered by.
Chevron is no trail blazer, they are more a follower type. That explains why it took them time to get going in Permian. Same happened before in Deepwater Wilcox play. BP was the trail blazer, Chevron followed but was able to deliver the Jack St Malo mega project. The deepwater business is likely not justified at lower oil prices, so they are hedging their bets on Permian for short to medium term.
No truer words spoken, 1vac.
Lol @ 1ajx
Chevron talked a good line about the value of their employees, until times got tough. Then "Human Energy" became "Human Excrement". Chevron dumped employees like used toilet paper and didn't do such a very fair job on deciding which ones to keep. Welcome to ChENRON.
Chevron will always be able to get employees back, but they will never have their trust again - at least of the smart ones. So save the money on the backpacks.
1war: "If Chevron could be profitable without a single employee, Chevron would have no employees." Those are wasted words since you and everyone knows that's not the case. Chevron's profitability is dependent on employees, and having the best, the better. Wise up.
I think there is a very large disconnect on what the purpose of a company (any company) is. Make money. That's it. Companies that fail to do this, go out of business. Chevron is not in the business of creating robust careers for employees, this is in some cases a necessary evil in order to...make money. If Chevron could be profitable without a single employee, Chevron would have no employees
People are leaving the company every week. The people leaving work in MCBU.
True, If good employees sense the company will no longer provide them a long solid career, most will leave or not give their best work to the company. The shareholder dividend is not the key to success and hiring the right employees when you need them won't be easy once the word on the street is that Chevron doesn't really care. Wise up.
xrt, "you can always hire new employees"... with an attitude like that, a company will never have good dedicated and the shareholders won't stick around either.
@yahoo? That's your domain? Some big fananciers that is. LOL, Give us a serious break -xkl.
qoo: I concur with your comments, but the last sentence in your post scares me. I kind of sense you may be right on that count too.
Perhaps Chevron made bad decisions, perhaps Chevron underestimated risks, and perhaps Chevron will go the way countless corporations have gone over the years...
In the end, the investors need their returns, if Chevron can no longer provide them, someone else will
The dividend is the only reason the company is worth the investment. The company exists to make money for the investors (same as all companies) . If not for investors, there would be no company, nor employees... You want to survive, keep the investors happy, you can always hire new employees
First of all, JW will be retired and playing golf long before any of this happens. Chevron has spent (wasted/squandered) tens of billions of dollars over the last 5 plus years on megaprojects with a very long term payout to true profitability, while other companies were actively drilling, producing, developing and adding to their acreage in the Permian. Chevron is late to the game on this. The company needs this revenue to offset the poor megaproject execution. JW made no mention of Bigfoot, which is still in dock. How much is this costing and when will it be deployed? Chevron is still selling assets to raise money to help with the current cash flow imbalance from the large drop (50%) in the price of crude oil. Why did Chevron lay off almost half of the staff for MCBU in Houston last April? This is the BU that encompasses the Permian basin. Many experienced and knowledgeable people are no longer there who would be a very good intellectual asset with the new strategy. I just sense that JW is putting a smiley face on what is, in reality, a tough time for this company.
Permian is not enough. Chevron needs to be competent at other oil assets such as deepwater and LNG, if it expects to compete as a global IOC. Oil producing countries and other IOCs will look to Exxon, Shell and Total as partners for big non-US oil projects. Shell, Total and ExxonMobil are already telling governments how bad BP and Chevron is at major projects, and oil concessions need to be awarded to them. Wall Street is clueless on how long term oil and gas business development works and is too enamoured with Permian. Permian is already held acreage, new business acreage capture is suffering
The dividend is the albatross around Chevron's neck. It will be lowered in the end.
JW is a financier. He likes value. Kirkland was an upstreamer who liked production volume, especially as prices rose. Value is good to chase when prices are low, which they seem to be for several more years. DAs will be in demand. facilities engineers may be not.
-Floyd