Chevron Corp Q4 2024 Earnings Call Transcript

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

Question: Biraj Borkhataria - RBC - Analyst : Hi, thanks for taking my question. And firstly, congrats on getting FGP online. I know its a big project. So I wanted to ask about sort of underlying cash flow, excluding working capital. This quarter, at least versus our model the $5.3 billion was quite a bit with what we expected. So could you just walk me through how I should think about any one-offs in there? And help me understand what the sort of underlying basis should be as we think about 2025? Thank you.

Question: Paul Cheng - Scotiabank - Analyst : Thank you. When we're looking at your next 2 years, I think we have a really good outlay and I think investors are comfortable. I think the question has always been talking about longer term, say, by the turn of the decade, I mean what you're going to do if we put half (inaudible) side. And in here, can you talk about your opportunity set you already had (inaudible), for example, I believe there's a lot of discovery you guys have made in Nigeria and Angola. But where are we in terms of bringing those that to the solution and having the project coming on stream? What we need in order for that to become [a lot]? and how big are those opportunities that? Thank you.

Question: Neil Mehta - Goldman Sachs - Analyst : Yeah. Good morning, Mike in your team. Just wanted to better understand the power business and the announcement from earlier this week with GE Vernova. Mike, you've talked a lot about power being a tricky business, and Chevron seen that firsthand over the last 30 years at different points. But and wanting to ensure that you're staying true to your core competency. So how do you think about playing in this ecosystem and ensuring that you de-risk it so that you can preserve the upside?

Question: Doug Leggate - Wolfe Research - Analyst : Thanks. Good morning guys. Thanks for the opportunity to ask Mike. I did warn Jake I may have a Part A and a Part B, so it's technically one question, but hopefully, you can -- I'll assume he blessed it. So the incremental disclosure on the bridge to 2027 is really, really helpful. But I wonder -- it's never enough, obviously, but I wonder if you could just benchmark against what you gave us in February 2023, I guess, under similar conditions. So what is the incremental 10, including the debt payback? What does that look like in 2027 versus, I guess, what you gave us before? And the Part B is obviously, Tengiz is the big story here. But a couple of days ago, I think the Kazakh government on the wire is actually talking about contract extensions, which is great news for you potentially, but on better terms. So I was just wondering if there was any color you could offer on that?

Question: Devin McDermott - Morgan Stanley - Analyst : Hey, good morning. Thanks for taking my question and for a detailed update today. Mike, I wanted to ask you about policy. There's been in the US now a series of energy-related executive orders over the past week. I was wondering if you could talk through how this might impact some of your oil and gas operations, especially given the large presence you have in the Gulf and then new energy opportunities and we think through the flurry of news flow over the last year? There's also been some headlines in your Venezuela license, if you could address that as part of the response. I'd appreciate it. I know a lot to unpack there, but I would love your thoughts. Thanks.

Question: Devin McDermott - Morgan Stanley - Analyst : Following up with --

Question: Stephen Richardson - Evercore ISI - Analyst : Hi, good morning. Mike, I was wondering if you could talk about the position of the Permian in the portfolio. You've got this 1 million-barrel a day target out there that looks like you're going to hit if you haven't already hit it pretty soon. And I know there was a previous target in the last Analyst Day that was a little higher than that. Can you maybe just talk about the right amount of unconventionals in the portfolio? And do we think about the Permian and the DJ? Do we think about it relative to the total -- is it production? Is it decline curve? How do you think about the right amount of un-conventionals for the size of the corporation over the next couple of years?

Question: Jason Gabelman - TD Cowen - Analyst : Hey, thanks for taking my questions. I wanted to ask about the TCO distribution, and I appreciate the detail between first half and second half of this year. The $5 billion and $6 billion for '25 and '26, is that similar to the $4 billion and $5 billion, respectively, that you guided to previously just at a higher price deck? And further to the distribution -- it looks like based on TCO's own filings at their operating expenses from 2022 to 2023 have gone up about $5 a barrel. I'm not sure if that's related to the Russian war or something else, but I wonder if that increase in OpEx is contemplated in your free cash flow guidance for TCO, or if that's something you expect to come back down? Thanks.

Question: Alastair Syme - Citi - Analyst : Thanks. I just wanted to ask about [Bolivia]. If you've got a good sense of why first exploration well failed and whether you've seen enough to make you want to go again in a different location? Thank you.

Question: Betty Jiang - Barclays - Analyst : Good morning. Thanks for taking my question. I want to go back to the Power venture. I want to ask about how do you think about the capital commitment for Chevron related to that venture? It is really impressive that you were able to secure these high-demand turbine spots. So have all the deposits for them being made and just how much equity capital would you be willing to put into it? Thanks.

Question: Ryan Todd - Piper Sandler - Analyst : Good, thanks. Maybe if I could ask one on the Gulf of Mexico, or Gulf of America, or whatever we're calling it now. You've now got two of the three projects online for the 2025 and 2026 time period with Ballymore coming soon. I mean what -- what have you seen in terms of reservoir performance so far? What have you learned in terms from these developments, both on the I guess, on the subsurface and on the facility side? And how does it inform kind of future potential for you in the basin?

Question: John Royall - JPMorgan - Analyst : Hi, good morning. Thanks for taking my question. So I was wondering if you can just talk about your operations in the Eastern [Med] today and just an update there. Obviously seen a significant improvement in the political situation in that part of the world, and there are no guarantees that's forever. But as Mike mentioned, you do have some project growth that you're working through there. So maybe just an operational update on how you're feeling about your position there and the risk as you see it today?

Question: Jean Ann Salisbury - Bank of America - Analyst : The ramp is basically tracking to your expectations or even exceeding them and when you might have any more to share about potential de-bottlenecking potential?

Question: Jean Ann Salisbury - Bank of America - Analyst : Yes. Yes.

Question: Lucas Herrmann - BNP Paribas - Analyst : Yeah, thanks Mike, Eimear. Thanks for the opportunity. Really just a point of clarification, Mike. You talked about the transaction with Wheatstone, or around Wheatstone with Woodside. You mentioned that -- you talked about better positioned to monetize. When you talk monetize, do you REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 4:00PM, CVX.N - Q4 2024 Chevron Corp Earnings Call mean monetize the resource that you have? Or do you also imply monetize the facility I look to take capital out of it in some way with a potential insurance pension fund? And if I might just ask one other question. In essence, when you talk about returns on the power business, do you think about returns volatility adjusted or naked, (inaudible) of a better phrase? Thanks very much.

Question: Joshua Silverstein - UBS - Analyst : Hey, good morning guys. Maybe switching to the refining and chems business. We're clearly in a weak price environment and margin environment right now. Other than maybe improving the product slate and doing some cost reductions, are there things that you guys do (inaudible) to improve your leverage to the recovery? Maybe bring forward some projects or turnaround, (inaudible) some other assets that might be initially challenged? Anything like that?

Question: Paul Sankey - Sankey research - Analyst : Hi Mike. Thanks a lot.

Question: Paul Sankey - Sankey research - Analyst : It's a pleasure to be back, Mike. I had a very quick one just about potential corporate actions. But the big idea was I was looking at your CapEx and that 14% to 16% range. I was just wondering what the chances are if you getting towards the lower end of that range because it strikes me that you could differentiate yourselves with lowering CapEx and falling CapEx over the coming years. And further to that, I was wondering, do you think there is potential, for example, for you to cut upstream CapEx once test is completed, how would that work out? Secondly, the volatility of your results. I was wondering, you underinvested in refining. Do you think that's been an issue? And then the wildcard was the potential for mega deals, the exact opposite under Trump and whether or not it might be a an idea to go really big as opposed to continuing to sort of try and shrink. And then the final element of the CapEx question was if you're doing this AI gas-fired power, does it -- did you cut back -- what are the areas that you're cutting back CapEx that presumably are now less attractive under the Trump guidance such as it is?

Question: Nitin Kumar - Mizuho - Analyst : Good morning, everyone. And thanks Mike for taking my questions. Congrats on starting [TCO]. I just want to touch on the cost -- structural cost reductions you've talked about. Could you break that $2 billion to $3 billion between your upstream and downstream a little bit? You were talking earlier about the margin pressure in downstream. And then as I look at Slide 10, and the trajectory of those savings, it seems like you're a little bit weighted towards 2025. So are they more related to asset sales? Or are there other things kind of in the remaining businesses that are helping?

Question: Bob Brackett - Bernstein Research - Analyst : Good morning. Question about the Permian. Clearly, you've laid out a disciplined model there to release cash flow, but you're uniquely positioned in that you have JV partners plus the royalty interest. You probably have the best view of the landscape. What are you seeing there in terms of discipline from the other operators? And is it a trend that's going to continue?

Question: Neal Dingmann - Truist - Analyst : Good morning. Thanks for getting me in guys. My question really, Mike, is just on the downstream segment. It's a little bit weak last quarter sequentially and year-over-year. And I'm just wondering, was that more driven by -- I know you had more turnarounds that you talked about having about 25% less of those this year? Or is it just continue to see more, I'd call it, macro pressures there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 4:00PM, CVX.N - Q4 2024 Chevron Corp Earnings Call

Question: Geoff Jay - Daniel Energy Partners - Analyst : Hi. Hey Mike. I was just kind of curious about Argentina. I mean, clearly, with Malayan office, it seems like a much friendlier place to do business. You mentioned it earlier. How do you see the politics and the opportunity set changing down there?