2014 Annual Stockholders Meeting Remarks by George L. Kirkland

George L. Kirkland

By George L. Kirkland, Vice Chairman and Executive Vice President of Upstream
Chevron Corporation

2014 Annual Stockholders Meeting

Midland, Texas, May 28, 2014

We had many notable accomplishments last year.

Our success has been driven by very consistent strategies appropriate to meet the energy demands of a growing world economy. Our upstream is growing profitably and focused on building legacy assets primarily associated with crude oil and LNG. Our downstream and chemicals business has improved returns and is pursuing selective growth opportunities. Our gas, midstream and technology organizations support the upstream and downstream businesses in meeting their objectives. Finally, we are selectively committing resources to renewables and energy-efficiency initiatives.

One of the ways we create value for stockholders is by funding high-return capital projects consistent with these priorities. To do that, we’ve set 2014’s C&E budget at $39.8 billion. This represents about a $2 billion reduction from 2013 spending. We anticipate we’ll reach peak spending this year for our key LNG projects, Gorgon and Wheatstone.

We’ve also indicated we expect spending to flatten through 2016, but we will continue to spend on investments that drive long-term growth. Over the next three years, almost 90 percent of our capital spending is dedicated to the upstream. 

Now let’s turn to the financial performance of our upstream business.

Once again our earnings-per-barrel performance leads the competition at nearly $23 dollars, more than $5 per barrel above our nearest competitor. This marks the fourth consecutive year of leading performance. We’ve also had the highest ROCE in the upstream sector since 2011, and our 17.2 percent ROCE in 2013 is industry-leading.

In short, we’re delivering leading financial results as we grow our resource base and production. Getting these results safely is a top priority of every Chevron employee.

Now let’s look at our plans for production growth.  

In 2013, net production was approximately 2.6 million barrels per day. Our base operations delivered strong performance with a decline rate of less than 3 percent. We continue to invest in our base business with an outstanding queue of major capital projects, leaving Chevron well positioned for strong growth.

Now I want to quickly cover our 2017 production target.

Some things have changed, but our growth strategy remains intact. World oil prices are higher and U.S. gas prices lower than expected, so we’ve made some portfolio choices that impact our outlook for 2017. We’ve revised our production target to 3.1 million barrels of oil-equivalent per day, a 20 percent production increase above 2013 levels.

Let’s look at some of the projects driving that growth over the next decade.

We have more than 70 projects, each with a Chevron share of more than $250 million, scheduled to start up by the end of this decade. In the near term, we’ll see growth from projects that have recently started up and are increasing production – Usan in Nigera and Papa-Terra in Brazil.

We also have numerous projects expected to start up between this year and 2016. In the U.S. Gulf of Mexico, Jack/St. Malo and Tubular Bells are both expected to start up by fourth quarter. And Big Foot is expected to start production mid-2015.

In Australia, Gorgon continues to make steady progress toward first LNG with construction 80 percent complete and startup targeted for mid-2015. Wheatstone is now almost 35 percent complete and remains on track.

By 2020, additional production growth is expected from projects in the Gulf of Mexico, West Africa and Kazakhstan. Our shale and tight resources will also be major contributors to our growth.

Turning now to our downstream and chemicals business.

2013 was a unique year for both Chevron and our competitors, with our entire industry experiencing a retrenchment of earnings and returns. At $1.25, refining and marketing earnings per barrel are No. 2 among our peers. And we delivered a 10 percent ROCE, putting us at No. 2 among our peers. So while the industry trended downward, we maintained the relative gains we’ve seen over the past few years.

In addition to improving our downstream and chemicals profitability, we’ve also focused on select areas for growth. Our Pascagoula base oil plant should be at full production by midyear, making Chevron the largest producer of premium base oil in the world. CPChem continues to make progress on key projects that take advantage of existing infrastructure and attractive feedstocks. This year CPChem plans to start up the world’s largest 1-hexene plant, and last month it broke ground on a world-scale ethylene cracker and derivatives unit in the U.S. Gulf of Mexico. These and other projects leverage existing asset base, technologies and partnerships to drive future earnings growth.

Thank you.

Read Chairman and CEO John S. Watson's Remarks from the 2014 Annual Stockholders Meeting.


This presentation of Chevron Corporation contains forward-looking statements relating to Chevron’s operations that are based on management’s current expectations, estimates and projections about the petroleum, chemicals and other energy-related industries. Words such as “anticipates,” “expects,” “intends,” “plans,” “targets,” “forecasts,” “projects,” “believes,” “seeks,” “schedules,” “estimates,” “budgets,” “outlook”, and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, many of which are beyond the company’s control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Unless legally required, Chevron undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are: changing crude oil and natural gas prices; changing refining, marketing and chemicals margins; actions of competitors or regulators; timing of exploration expenses; timing of crude oil liftings; the competitiveness of alternate-energy sources or product substitutes; technological developments; the results of operations and financial condition of equity affiliates; the inability or failure of the company’s joint-venture partners to fund their share of operations and development activities; the potential failure to achieve expected net production from existing and future crude oil and natural gas development projects; potential delays in the development, construction or start-up of planned projects; the potential disruption or interruption of the company’s production or manufacturing facilities or delivery/transportation networks due to war, accidents, political events, civil unrest, severe weather or crude oil production quotas that might be imposed by the Organization of Petroleum Exporting Countries; the potential liability for remedial actions or assessments under existing or future environmental regulations and litigation; significant investment or product changes required by existing or future environmental statutes, regulations and litigation; the potential liability resulting from other pending or future litigation; the company’s future acquisition or disposition of assets and gains and losses from asset dispositions or impairments; government-mandated sales, divestitures, recapitalizations, industry-specific taxes, changes in fiscal terms or restrictions on scope of company operations; foreign currency movements compared with the U.S. dollar; the effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies; and the factors set forth under the heading “Risk Factors” on pages 27 through 29 of the company’s 2013 Annual Report on Form 10-K. In addition, such results could be affected by general domestic and international economic and political conditions. Other unpredictable or unknown factors not discussed in this presentation could also have material adverse effects on forward-looking statements.


Published: May 2014