Chevron Plans Big Low Carbon Investment Boost As Engine No 1 Activists Loom

“Chevron intends to be a leader in advancing a lower carbon future,” said CEO Michael Wirth.

Chevron Corp.  (CVX) - Get Chevron Corporation Report said Tuesday that it will triple its capital investment plans over the coming years, while reaffirming its near-term cash flow forecasts, as the oil major accelerates its transition to lower carbon businesses amid reports of an activist investor challenge.

Chevron will boost its capital investment plans to $10 billion through 2028, the company said, while setting 2030 goals for its new lower carbon businesses that include boosts in renewable natural gas and hydrogen production and increased carbon capture offsets to 25 million tons per year. 

Chevron also reiterated its forecast to earn a double-digit return on capital employed by 2025, while generating $25 billion in cash flows -- above its dividend and capital spending -- over the next five years.

“Chevron intends to be a leader in advancing a lower carbon future,” said CEO Michael Wirth. “Our planned actions target sectors of the economy that are harder to abate and leverage our capabilities, assets, and customer relationships.”  

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Chevron shares were marked 0.2% higher in early trading Tuesday to change hands at $98.16 each, a move that would trim the stock's six-month decline to around 10.8%.

Chevron's update follows a Wall Street Journal report last week that said the oil group met with executives at Engine No. 1, the hedge fund that won a proxy battle for seats on the board at Exxon Mobil  (XOM) - Get Exxon Mobil Corporation Report earlier this year.

Chevron shareholders have backed the company's plans to cut carbon emissions by voting for its "Scope 3" transition plans, but the the group has yet to unveil detailed emissions targets. 

Chevron posted adjusted earnings for the three months ending in June of $1.60 per share on revenues of $37.6 billion for its fiscal second quarter as free cash flow hit the highest levels in two years thanks to the broader oil market rebound.

West Texas Intermediate crude prices traded between $63 and $75 per barrel over the three months ending in June, a range that was around 300% higher than the deep pandemic troughs recorded over the same period last year, helping Chevron's worldwide net production rise 145,000 barrels from last year to 114 million.