Chevron Corp Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jean Ann Salisbury - BofA Securities Inc - Analyst : The main feedback I have heard from investors hesitant on Chevron is wanting resolution on TCO start-up and tests. At what point should investors consider TCO start-up largely derisked. Is there like a specific milestone in the commissioning and start-up process like where you've listed here where you could say, okay, it started probably really can't slip much from here? And are we there now?

Question: Neil Mehta - The Goldman Sachs Group Inc - Analyst : I just want to spend some time on the Permian. You had indicated in the prepared remarks that you expect to finish towards the top end of the 4% to 7% range in guidance and you highlighted strength in the company operated in New Mexico. Can you spend a little bit more time unpacking that, the sustainability of that? And just how should we think about the path to ultimately getting to plateau at this asset? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 01, 2024 / 3:00PM, CVX.N - Q3 2024 Chevron Corp Earnings Call

Question: Douglas George Blyth Leggate - Wolfe Research, LLC - Analyst : If I could observe as a kind of precursor to my question, this is probably your best operating quarter in quite a while, so congrats that share price is responding accordingly. But if we look at your relative underperformance since you announced the Hess deal, there is clearly a huge weight of uncertainty on the stocks, basically wiped out the value of Hess. So here is a Hess question. And it goes something like this. You've now got FTC since we last spoke on the last call. You've got the shareholder vote and you're moving ahead with, I guess, what many would think about the post Hess acquisitions disposals. The synergies presumably are not related to Guyana. Why not go ahead and close the deal if you're so confident in your legal position?

Question: Biraj Borkhataria - RBC Capital Markets - Analyst : I wanted to ask around the Canada sales. So if I go back to the Hess deal, the rationale was to buy long cycle, high-quality resource and obviously helps diversify your portfolio and Guyana is very different to Canada, obviously. But could you just talk about the decision to execute that divestment, one, now ahead of the arbitration decision, which was a surprise. But also more broadly, I would have thought you were a net buyer of long-cycle resource. So if you could just talk about how you're thinking about that and how you're thinking about the portfolio, that would be helpful.

Question: Joshua Silverstein - UBS Group AG - Analyst : Just on the $2 billion to $3 billion cost savings, how much of this comes from the announced $8 billion of asset sales year-to-date versus what maybe comes from additional asset sales and structural cost savings? And then any split between upstream or downstream?

Question: Devin McDermott - Morgan Stanley - Analyst : I wanted to ask about the balance sheet and shareholder returns. Your net debt ticked up a bit quarter-over-quarter in 3Q versus 2Q upping our support strong buybacks. And you're still well below your long-term targets. You have cash coming in the door from asset sale proceeds, as you noted, between now and year end and the nice inflection in the Permian and TCO cash flow into next year. But I guess my question is given how volatile commodity markets and oil markets specifically have been in the recent, how do you think about continuing to use the balance sheet to support shareholder returns versus tapering it back and waiting for potentially lower commodity prices over the next few years. So balance sheet use and how you think about that is the core of the question. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 01, 2024 / 3:00PM, CVX.N - Q3 2024 Chevron Corp Earnings Call

Question: Francis Lloyd Byrne - Jefferies Group LLC - Analyst : First, congrats to you and your M&A team, I think the divestiture progress has been great. I want to follow up quickly to Biraj's question, AOSP seemed very opportunistic. Does that change your long-term goals? And then really, I wanted to ask about the DJ and see I mean, it's just really impressive operating progress there, synergies, free cash flow. But I think the surprise has to be you guys holding it flat to the end of the decade. Maybe you can just comment on the opportunities there and whether there's more opportunities for scale. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 01, 2024 / 3:00PM, CVX.N - Q3 2024 Chevron Corp Earnings Call

Question: Wei Jiang - Barclays plc - Analyst : So I want to ask about Gulf of Mexico. Feels like there is a bit of technology renaissance that's happening in GA and including anchor project that just came online. Can you talk about how the technology is opening up new resource opportunities for GA for the Chevron portfolio? And does that represent any upside to how you think about the longer-term production and resource opportunities in that area?

Question: Paul Cheng - Scotiabank - Analyst : You have an excellent production record in both the Tengiz and Gorgon that they have done well. And it is particularly impressive that given both of them, you have turned around not like the turnaround has done well and maybe they're coming in faster than the scheduled time. So is it a one-off or that you have changed the process so that this is a repeatable benefit that we could expand in the future.

Question: Bob Brackett - Sanford C. Bernstein & Co LLC - Analyst : If I return to the structural cost reductions, and I want to put it in the context of the relocation from California to Texas. Is that relocation an opportunity to the cost reductions, ability to redesign processes and organizations? Or is it a threat to the cost reductions, right? There's chaos and lack of continuity. How do you think about that?

Question: Lucas Herrmann - BNP Paribas - Analyst : Fairly obvious question, I guess. I just wanted to talk to you, I wondered if both of you could talk a little bit more about CapEx going forward. And maybe it's an inappropriate time and December will be better. But if I look at what's happening with the business, obviously, Tengiz starts up. You've got your assets in the Gorgon coming on. You're talking about driving free cash flow driving for NPV value in the Permian CapEx coming down there. If I think about the current rate of CapEx spend, including associates, it feels as though it's around $18 billion, $18.5 billion if you guided at the beginning of the year. If I look at the opportunities for that CapEx to start to fall these projects or production plateaus or projects come on, it feels as though maybe $3 billion, $4 billion of CapEx opportunities, so it's the opportunities for CapEx decline. Yes, it's there. What's really hard, Mike, Eimear, is to see where that goes, particularly given, obviously, everything going on in the East Med at the moment. So is it right now to start thinking about CapEx coming down very materially as we move forward over the next two, three years and you're really starting to benefit emphatically from a portfolio that, in essence, is deep in resource, but pretty long duration.

Question: John Royall - JPMorgan Chase & Co - Analyst : So could you talk about your position in California in the downstream, still having 2 refineries there, and we've had another closure announced over the past couple of weeks, is shutting capacity something you've considered in California? And how do you think the market will be impacted by this latest closure? Do you think we'll see structurally higher profitability there as a result or maybe things will adapt back to where they were?

Question: Roger Read - Wells Fargo & Company - Analyst : Yes, I'd like to ask you, Mike, the LNG markets globally, we've seen some new units get delayed. We've seen a couple of other companies this earnings season talk about the outlook in terms of supply/demand balance favoring tightness in '25. Just curious how you look at it and maybe if you could remind us your contract versus spot exposure so we could think about how that might play to the margin potential for Chevron in '25. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 01, 2024 / 3:00PM, CVX.N - Q3 2024 Chevron Corp Earnings Call

Question: Nitin Kumar - Mizuho Securities Co Ltd - Analyst : Mike, I wanted to just maybe touch a little bit on the chemicals business. It seemed like it was a bit of a tailwind to earnings this quarter. What are you seeing from your supply chain, particularly in Asia? You've heard about some stimulus to be offered there, but just looking at what the earnings look like for the chems business?

Question: Ryan Todd - Piper Sandler Companies - Analyst : Maybe just maybe one on the Eastern Mediterranean. Can you maybe just provide a status update in terms of the current operations, the Tamar expansion efforts, the next leg of potential expansion of commercial development there and what impact I guess, what is and is not happening or moving forward given the current uncertainties in the region right now?

Question: Alastair Syme - Citigroup Inc - Analyst : Mike, you talked earlier to the operated Permian position. I just wanted to get a sense of what you're seeing in the non-ARP royalty piece. Are we seeing a two-speed operating system in the basin with respect to what various operators are doing?