Chevron is shifting U.S. shale strategy from aggressive growth to steady profitability by leveraging scale, technology and a massive Permian footprint. The Hess acquisition provides major international growth exposure, including a large Guyana position, while adding Bakken assets that deepen reliance on U.S. onshore production. U.S. onshore now constitutes roughly 40% of Chevron's global oil and gas output, nearly 50% including the Gulf of Mexico. The company plans to plateau U.S. volumes and convert shale operations into a consistent free-cash-flow engine to support dividend increases, move off high capital spending cycles, and improve investor sentiment.
Leaning on West Texas' booming Permian Basin, Chevron says its combination of sheer scale and technology allows it to hop off the spending treadmill and finally pump the shale business for healthy profitability without the constant cry for "Drill, baby, drill." While Exxon Mobil may remain larger, Chevron is aiming for No. 1 in the leery eyes of a Wall Street that previously soured on the oil sector.
The closing of its $53 billion megadeal to acquire Hess in July allows Chevron to focus internationally on new growth, especially its acquired position offshore Guyana-arguably the largest oil discovery of the century-while using the U.S. and its massive footprint in the Permian to reap the needed influx of free cash flow. The Hess deal also includes a massive footprint in North Dakota's Bakken Shale oil play, adding to Chevron's heavy reliance on oil and gas production in onshore U.S. shale
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