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Insight 29 May 2019

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Already a leader in the Permian, Chevron is well positioned to deliver sustained, profitable growth if the oil price holds up. Add its youthful, highly cash-generative legacy assets and the company is in an enviable position.

Tom Ellacott

Senior Vice President, Corporate Research

Tom Ellacott

Senior Vice President, Corporate Research

Tom leads our corporate thought leadership, drawing on more than 20 years' industry knowledge.

Latest articles by Tom

View Tom Ellacott's full profile

What’s inside this report?

Chevron’s bid for Anadarko was compelling. But the company didn’t need the deal. We analyse what’s next for the SuperMajor and highlight why we think it is in an enviable position.

Key themes we discuss are:

Chevron’s strong commitment to capital discipline
Its asset rationalisation programme and focus on portfolio high-grading
The quality and depth of Chevron’s Permian tight oil portfolio

Why buy this report?

Get our pick of Chevron’s top five most likely takeover targets, plus one wild card
Learn why we think there’s a further US$28 billion in potential upstream disposals in Chevron’s portfolio
How can Chevron create more value in the Permian?

Benefit from our proprietary data and analysis, underpinned by our industry leading asset models to help you understand what’s next for Chevron.

Report summary

Chevron's bid for Anadarko was compelling from a strategic, portfolio and valuation perspective. But the company underscored its commitment to capital discipline by not raising its initial offer. So, what next? The execution of the Permian tight oil growth agenda and growing shareholder distributions will be strategic priorities. Chevron could also expand its disposal programme and corporate M&A will remain in the crosshairs.

Executive Summary
Anadarko bid reinforces Chevron's commitment to capital discipline
- Change of tack
Fresh high-grading drive
Capital allocation priorities could tilt back in favour of investment
- 1. Increase organic investment in the Permian
- 2. Corporate M&A still in the crosshairs
- 3. Developing longer-term strategic options
Appendix

Tables and charts

This report includes the following images and tables:

Strategic fit of Chevron's upstream portfolio – US$28 billion yet to sell?
Chevron's potential upstream asset sales candidates
Chevron's cash inflows and outflows (base case price and assuming 7% per annum dividend growth)

Geographical overlap of potential Permian acquisition targets
New growth opportunities added since 2014
WM base-case Permian capex projection
Evolution of Permian NPV10
Potential corporate acquisition targets
Impact of corporate acquisitions on Chevron's Permian production and company EVs
Wood Mackenzie production outlook
Market premium / discount to WM NPV,10
% of total upstream value accounted for by the top four regions
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