Michael Wirth, Chevron’s new chief executive, has said the company plans to maintain a tight grip on capital spending, despite the surge in oil prices over the past year and warnings that they could rise even higher over the next few years.
In an interview, Mr. Wirth, who took up his post in February, said he wanted Chevron to be able to cover its dividend from its free cash flow at an oil price of $50 a barrel, well below today’s level of about $70 a barrel for Brent crude. He stressed the importance of controlling costs, sticking to capital spending budgets and generating cash to pay the dividend, rather than pursuing every possible opportunity for growth. “We have increased our dividend payment for 31 consecutive years,” he said.
“Our shareholders know that, and they value that.” The slump in oil investment since prices collapsed in 2014 has prompted a swelling chorus of warnings from analysts and executives that world crude production growth could fail to keep pace with demand, leading to shortages and soaring prices in the next decade. Mr. Wirth acknowledged that was possible. “Welcome to the oil business: it’s what it’s always been,” he said. “Prices are hard to predict: it’s a commodity market.”