<div id="readability-page-1"><div><div>Chevron Corporation is an American company and one of the world's largest oil producers. In Q3/2025, it recorded daily production of 3.61 million barrels, an 8% increase from the previous year. This growth is primarily attributed to enhanced performance in the Tengizchevroil (TCO), Permian Basin, and Gulf of Mexico developments.Chevron traces its origins back to the famous Standard Oil Company, founded by John D. Rockefeller in 1870. In 1911, the U.S. Supreme Court ordered the split of Standard Oil into 34 smaller companies due to violations of federal antitrust laws. Chevron was one of these successor companies and was originally known as Standard Oil of California (ExxonMobil, currently the largest American oil company, also emerged from this court decision). In 1984, Standard Oil of California officially changed its name to Chevron Corporation.Since its foundation, Chevron's core business has been the extraction and production of oil products. With more than a century of experience in the upstream oil sector, the Company has developed valuable expertise and attained a leading market position. This has enabled it to generate consistently strong cash flow from its operations, which it has reinvested in growth opportunities and returned to its shareholders.It is a stock that well respected investors select for the dividend income it offers to its shareholders like Warren Buffett and Arnold Van Den Berg who have Chevron inside their portfolio in this moment.In the period 2012-2025, Chevron paid increasing dividends, from $0.81 on 25/01/2012 to $1.71 on 10/12/2025.The Company also paid dividends during difficult times (e.g. COVID) thanks to a strong balance sheet and financial discipline.<figure></figure>In Q3/2025, Chevron repurchased stock for $2.6 billion and paid dividends for $3.4 billion.The Company's Board of Directors declared a quarterly dividend of $1.71 per share, payable on the 10th of December 2025. From 2022 to 2024, Chevron provided its shareholders with an annual dividend increase ranging from 6% to 8%, above the normal increases it used to offer to its shareholders. Specifically, the increases were 6.97% in 2022, 6.34% in 2023, and 7.95% in 2024. In this article, we explain the reasons behind Chevron's ability to offer these notable increases over the past three years and what investors can reasonably expect for the future. The upstream business unit: the Company's primary cash generatorChevron organizes its activity through two main business segments:<ul><li>The upstream business unit primarily consists of the exploration, development, production, and transportation of crude oil and natural gas (oil production is a consolidated business for the upstream segment, while natural gas is considered a growing activity).</li><li>The downstream business unit, which primarily consists of the refining and marketing of oil and gas products.</li></ul>The upstream and downstream business units have generated &#34;cash flow from operating activities&#34; in the range of $15-30 billion (based on the cycle) in the period 2012-2024. Historically, the upstream business unit has been the main contributor to earnings and cash flow generation. Recently, this business unit's performance has driven record returns for shareholders.In 2022, the upstream business unit outperformed in the USA ($12.6 billion) and internationally ($17.7 billion).In 2023, the international upstream business unit outperformed again, recording $13.3 billion.In 2022 and 2023, the upstream business unit made a significant contribution to the Company's cash flow, which achieved record levels of $49.6 billion in 2022 and $35.6 billion in 2023. This robust cash flow enabled Chevron to deliver annual dividend increases that exceeded typical levels.Will the upstream business unit still be the key cash flow generator in the future?I have analyzed the CAPEX allocation since 2021. Based on my analysis, I expect the upstream business unit to remain Chevron's core business for many years to come.As shown in the table below, the Company has allocated about 80% of its budget to investments in the upstream business unit every year since 2021. In 2023, 2024, and for the first six months of 2025, the allocation was 86.41%, 87.13%, and 92.43%, respectively.<figure></figure>Since the cash engine will remain the same, can investors expect similar dividend growth in the future?Chevron is dedicating its CAPEX budgets to investments primarily in Kazakhstan, the Gulf of Mexico, the Permian Basin, and Guyana. The Company expects these regions to be the main contributors to Company's cash flow generation in the coming years.In the Permian Basin, Chevron has successfully achieved its production target of 1 million barrels, and this location is now poised to become a cash flow source.The Company will shortly redirect CAPEX resources toward its new development projects in Guyana, along with a focus on higher-return assets. At the end of 2024, Chevron sold its assets in the Athabasca oil sands and the Duvernay shale formation to Canadian Natural Resources for $6.5 billion. This all-cash deal is part of Chevron's strategy to reshape its investment portfolio and divest assets for about $10-15 billion by 2028.Chevron's overall strategy is to divest assets and focus resources on higher-return investments, such as the Hess acquisition, making capital efficiency the key differentiator.Although Chevron is reallocating its investments toward higher-return assets, I do not believe the Company can guarantee a 6-8% increase in dividends over the coming years. This is primarily due to the expectation that oil and gas prices will remain below the levels seen from 2022 to 2024.Oil &amp; Gas prices: period 2022-2024In 2022, the Brent price jumped to $101 per barrel, and it remained at high levels in 2023 and 2024 ($83 and $81 per barrel). In relation to natural gas, the U.S. Henry Hub jumped to $6.36 per thousand cubic feet.The following macroeconomic factors drove these increases:<ul><li>The Ukraine-Russia war</li><li>Supply decisions by OPEC+ </li><li>A continued recovery in demand due to further easing of COVID-19 restrictions. </li></ul>In 2022, refining margins were higher than in 2021 due to recovering demand for refined products, low product inventories, lower industry refining capacity, and lower product exports from Russia and China. Chevron's leadership in the oil sector, bolstered by strategic investments in key areas such as the Permian Basin, Kazakhstan, and the Gulf of Mexico, has enabled the company to fully capitalize this favourable macroeconomic situation. This has resulted in substantial cash flow generation, which Chevron has utilised to offer recorded dividend increases to its investors. Oil &amp; gas prices: Forecast from 2026 to 2030The macroeconomic environment in the coming years is not expected to offer the same opportunities for large oil companies. The Brent price averaged $71 per barrel for the first nine months of 2025 ($83 per barrel during the same period in 2024) and ended October at about $65 per barrel. The WTI price averaged $67 per barrel for the first nine months of 2025 ($78 per barrel during the same period in 2024) and ended October at about $61 per barrel. Currently, low oil prices are primarily due to oversupply; while demand has remained stronger than expected, global supply continues to increase. The situation has been significantly influenced by the OPEC+ cartel and U.S. production (EIA expects that improvements in well productivity will push U.S. crude oil production to an all-time high of nearly 13.6 million barrels per day by December 2025). This imbalance between demand and supply is anticipated to result in oil prices to fall more and ranging from $55 to $60 per barrel in 2026.However, it is unlikely that oil prices will stay low over the next five years; oil seems too cheap to balance the market in the long-term.In 2025 and 2026, demand is expected to rise by 800,000 to 900,000 barrels per day annually. Unless a global recession occurs, this trend is likely to continue at a similar pace in 2027 and into 2030, necessitating a significant increase in production.Oil supply is expected to remain high in 2026 and early 2027. However, by 2028, annual supply growth is likely to fall behind yearly demand growth. When this occurs, oil prices are expected to rise, encouraging more investment in the industry.Therefore, it is unlikely that oil will be $60 a barrel by 2030; a more reasonable estimate is $75 a barrel. However, I do not foresee the conditions necessary for oil to reach $100 a barrel in 2030.Regarding the LNG business, the price of LNG products is expected to decline between 2027 and 2029 due to increased production, with 50 million tons of new capacity added each year (+30% over three years). This rise in production is likely to reduce potential profits for companies in this sector.Final CommentChevron has a solid tradition of dividend returns; historically, the Company has offered increasing dividends thanks to its capacity to generate solid cash flows from its oil &amp; gas businesses.Between 2012 and 2025, the Company consistently increased its dividends, from $0.81 on 25/01/2012 to $1.71 on 10/12/2025. From 2022 to 2024, Chevron provided its shareholders with annual dividend increases that ranged from 6% to 8%, surpassing the typical increases it usually offered (specifically, the increases were 6.97% in 2022, 6.34% in 2023, and 7.95% in 2024).What should a dividend investor reasonably expect from Chevron over the next 35 years?Since 2021, Chevron has dedicated a significant percentage of its CAPEX budget to investments in its upstream business unit. Recently, it completed the acquisition of Hess and announced a plan to reshape its portfolio by focusing on higher-return assets. The Company expects to reduce costs per barrel and increase productivity in the coming years, particularly thanks to investments in Guyana, where production costs per barrel are already below $35.However, I believe that this increase in productivity will not be sufficient to compensate for the low quotations on oil &amp; gas and generate the cash flow to support an annual dividend increase of 6-8%.As explained previously, oil quotations have decreased this year, and they are expected to fall further in 2026 (to about $55 per barrel).In Q3/2025, Chevron's earnings dropped to $3.3 billion ($4.6 billion in Q3/2024) mainly due to lower crude oil prices and costs from the Hess acquisition, partially offset by record production (thanks to Hess) and better refining profits.In 2024, the annual dividend was $6.52 ($1.63 per quarter). This year, Chevron offers an annual dividend of $6.84 ($1.71 per quarter). Therefore, the Company will increase its dividend by 4.91% this year, below the levels recorded in 2022, 2023, and 2024. In my opinion, investors can reasonable estimate annual dividend increases of about 5% until 2030.What assumptions would have to change for 78% dividend growth to return?The anticipated rise in oil quotations beginning in 2028, coupled with the returns from investments in Guyana, are expected to lead to stronger cash flow generation. In particular, investments in Guyana should provide the level of cash flow that Chevron needs to increase dividends by 7-8% annually. The oil extracted in Guyana is relatively cheap, with production costs below $35 per barrel, making it highly profitable and attractive for investment. We believe that Chevron will replicate its successful strategy from the Permian development by focusing on increasing activity and enhancing production efficiency to reduce the breakeven point to below $30 per barrel.If Chevron achieves this goal, Guyana could significantly contribute to an estimated annual dividend increase of 7-8% over the long-term. This projection takes into account the reshaping of its portfolio and the increasing returns on assets from other capital expenditures.</div></div></div>

Chevron Corporation, a leading oil producer, reported a Q3/2025 daily production of 3.61 million barrels, an 8% increase from the previous year. The company has consistently increased dividends, with a quarterly dividend of $1.71 per share declared for December 2025. Chevron's upstream business unit remains its primary cash generator, contributing significantly to cash flow, which reached record levels in recent years. The company plans to continue investing heavily in upstream operations, particularly in regions like Kazakhstan and the Permian Basin, to sustain dividend growth in the future.

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